The Japan International Cooperation Agency (JICA) signed a Loan Agreement (L/A) with the Government of Nepal for the “Nagdhunga Tunnel Construction Project (Phase II)” in Kathmandu, the capital of Nepal, on June 3. The L/A was signed by Mr. Dani Ram Sharma, Director General, International Economic Coordination Bureau, Ministry of Finance, Nepal, and Mr. Mizuki Matsuzaki, Director General, JICA Nepal Office.
Signing Ceremony
This project is the first mountain road tunnel to be constructed in Nepal, where the majority of the country’s land area is mountainous, and is a pioneering project in the development of tunnels, an important transportation infrastructure that will support the country’s future social and economic development.
During the torrential rains of 2024, the tunnel was used to evacuate people and allow emergency vehicles to pass through before it was opened, and its effectiveness was widely recognized as an alternative route to avoid dangerous areas in mountainous regions where landslides frequently occur. Furthermore, this project utilizes the advanced tunnel technology that Japan has cultivated over the years to cope with the soft and complex geological conditions unique to the Himalayan Mountains.
The project, which is being promoted by many stakeholders in Japan and Nepal working together, is expected to further strengthen the cooperative relationship between the two countries, which are celebrating the 70th anniversary of their diplomatic relations.
A summary of the business is as follows
Nagdunga Tunnel Construction Project (Phase II)
Nagdhunga Tunnel Construction Project (II)
Country (Region)
Nepal (Kathmandu and Dhading districts)
Business Objectives
This project will construct a tunnel in the Nagdhunga Pass on the main road connecting Kathmandu and major cities to facilitate the transportation network along this section, thereby contributing to the promotion of social and economic development in the region by meeting the rapidly increasing traffic demand, shortening travel time, and improving traffic safety.
Business
a) Civil engineering work (tunnel construction, access road construction, bridge construction, power distribution line construction, construction of toll stations and administrative offices, etc.)
(b) Consulting services (detailed design, bidding assistance, construction supervision, operation and maintenance management capacity building support, etc.)
Loan amount (maximum)
5.7 billion yen
Interest Rates
Body: 1.95% Consulting and services: 0.55
Redemption period
30 years (including 10 years of deferment)
Procurement Conditions
General untied
Implementing Agency
Department of Highways, Ministry of Infrastructure Development
Contribution to the achievement of the SDGs
Goal 8 (both job satisfaction and economic growth)
Goal 9 (Create a foundation for industry and technological innovation)
Schedule for future project implementation (tentative)
Scheduled completion of the project: July 2026 (project completion at the time of provision of facilities)
2. expected date of sending invitation for consulting services (detailed design, etc.): hired
3. public announcement of bids for the first package of international competitive bidding for the main body of work: contracted
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