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NEPAL

NORTH-SOUTH TRANSPORT CORRIDOR OPTIONS

INTERNATIONAL DEVELOPMENT ASSOCIATION

ASSISTANCE STRATEGY NOTE

March 1, 2005



Nepal: North South Transport Corridor Options IDA Strategy Note

TABLE OF CONTENTS

Page

Acknowledgement 3

Abbreviations and Acronyms 4

Executive Summary 5

1. Background 8

2. Sector Issues 8

3. North South Transport Corridor Options 13

4. Conclusions and Recommendations 18

Annex 1: DOR Road Sector Portfolio 19

Annex 2: Status of North South Links to District Headquarters 21

Annex 3: List of Previous Studies on Fast Track Route between Kathmandu and Terai 22

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ACKNOWLEDGEMENT

The Strategy Note was prepared by Binyam Reja, (Transport Economist/Task Team Leader, SASEI) with

input from Rod Stickland (consultant). Surendra Joshi (Sr. Transport Specialist, SASEI) and Ernst

Hunning (consultant) contributed to an earlier draft. Peer reviewers were Jean-Noel Guillossou (Sr.

Transport Economist, AFTTR) and Simon Thomas (Sr. Transport Economist, SASEI). The Note was

prepared under the overall guidance of Guang Zhe Chen, Sector Manger, Transport, SASEI. The Note

incorporates comments received from His Majesty’s Government of Nepal. An earlier draft was discussed

during a stakeholder workshop in Kathmandu, Nepal.

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ABBREVIATIONS AND ACRONYMS

BOT Build-Operate-Transfer

DDCs District Development Committees

DOLIDAR Department of Local Infrastructure Development & Agriculture Roads

DOR Department of Roads

EWH East-West Highway

FR Feeder Roads

FY Fiscal Year

GDP Gross Domestic Product

HMGN His Majesty’s Government of Nepal

IDA International Development Association

LID Local Infrastructure Development

MOLD Ministry of Local Development

MPPW Ministry of Physical Planning & Works

NEPECON Nepal Engineering Consultancy Services Center Ltd.

NPC National Planning Commission

PIP Priority Investment Plan

PPP Public Private Partnership

PSP Private Sector Participation

RF/RBN Road Fund and Roads Board Nepal

SRN Strategic Road Network

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EXECUTIVE SUMMARY

1. His Majesty’s Government of Nepal (HMGN) has requested assistance from the InternationalDevelopment Association (IDA) to improve Nepal’s north-south transport corridors, aimed at enhancingthe accessibility of remote hill districts and at improved market integration and trade facilitation. In thiscontext, the concept of north-south transport corridors involves three distinct elements: (i) development of

Feeder Roads to link unconnected District Headquarters with Nepal’s Strategic Road Network (SRN); (ii)construction of additional cross-border links with China; and (iii) construction of a new direct link between Kathmandu and the Terai, also known as the “Fast Track”.

2. To enable IDA to consider this request further, an IDA team has considered relevant aspects of Nepal’s roads sector circumstances and institutions, has examined the specific technical and investmentissues, and on that basis has identified key elements of possible investment to HMGN’s road sector program.

3. Sector Overview. Both by regional comparisons and relative to local development needs, Nepal’smain road network has, since the late 1990s advances, lacked much-needed expansion and improvement,as well as showing a marked deterioration in the overall road condition and quality. The main

impediments have been:

(a) Resource constraints due to low resource mobilization in the sector and declining HMGNallocations for sector expansion, as well as maintenance funding;

(b) Lack of effective, integrated sector policies and implementation strategy;

(c) Ineffective, narrowly focused road investment planning based primarily on administrative‘connectivity’ targets rather than on economic objectives and development outcomes; and

(d) Institutional constraints for effective performance due to capacity, structural and incentive problems, weak monitoring and poor overall accountability.

4. Conflict Impacts. The ongoing conflict between HMGN and the Maoists insurgents has clearlyhampered but not prevented implementation of development assistance projects. As adherence to openand substantive community consultation and participation during implementation has proven valuable,any operations in this sector would need an effective local communication strategy aimed at the affectedcommunities.

5. Sector Resources. While the establishment of an autonomous Roads Board and Road Fund isdesigned to improve domestic resource mobilization for road maintenance, the resources generated by theRoad Fund so far have still been relatively low. Even in combination with HMGN budget allocations,this leaves 80 percent of the road sector budget in FY04/05 to be dependent on external assistance.Overall, the road sector is acutely under funded, and both HMGN budget allocations and the scale of

collections for the Road Fund should be increased to match current and projected needs.

6. Road Sector Strategy. As presently expressed in the 2001 HMGN National Road TransportPolicy and the HMGN Tenth Five Year Plan, HMGN road sector strategy needs to shift fromadministrative priorities into a more broadly–based, outcome-oriented roads development and investment policy, wherein sector-wide priorities reflect both strategic and development objectives. The primary aimshould be balancing the needs of the population and the economy across all regions, with more priority being given to the construction and management of all weather feeder roads that provide transport access

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to settlements. The roads classification and responsibility framework also needs updating by HMGN toensure realistic and effective attribution of responsibility and ownership for all roads.

7. Institutional Factors. Responsibility for implementing HMGN road sector objectives has beenrelatively fragmented and uncoordinated among relevant agencies, which must be overcome in order todevelop a sector-wide program. Capacity building activities in the sector need to shift from the typical

project-oriented focus to aim at sustainable sector-wide approaches and outcomes. The sector also needsan effective performance evaluation and management framework.

8. The Department of Roads (DOR), the main HMGN roads agency responsible for the SRN, is beginning to embrace such reforms in its Institutional Strengthening strategy. It is implementing majorchanges, including modernized staff mobility policies, road sector skills training, functional and staffingadjustments, more cost-effective and accountable business practices, upgraded quality management and(subject to HMGN endorsement) appropriate ‘performance incentives’ and ‘performance management’mechanisms. For feeder road developments to link district headquarters, the DOR has the appropriateHMGN mandate, although its limited resources have so far been concentrated on operating andmaintaining the main national highways, leaving it with little capacity for feeder roads development andoperations in remote areas. To meet future feeder road demands for linking district headquarters, DOR

will need to strengthen its regional units and to take action to counter the effects of poor incentivestructures, its heavily centralized management style, and lack of expertise in community-based roadworks, which are essential for feeder road development in remote areas.

9. Development of Feeder Roads to link unconnected District HQ with the SRN . Only half of the1570 km earthen tracks identified in the Priority Investment Plan (PIP) and other DOR documents toconnect the 17 non-road-served district HQs have so far been opened to a Fair Weather Earth Trackstandard. Motorized transport has yet to start because of the poor road construction quality, missing linksand the lack of completion of the initial track access to district headquarters. To serve the beneficiarycommunities appropriately, the Earthen Tracks at least need upgrading to all-weather standard, as well aslinks to settlements along the corridor. Beyond the PIP, a new, well-defined, outcome-oriented Road

Sector Program should be prepared by HMGN to guide the development of appropriate road access to

all isolated settlements, and of all-weather motorable links to the SRN for large-population settlements.The Road Sector Program should provide the basis for donor support in the sector, as well as for providing support for road connectivity and upgrading of existing roads to all weather access to hilldistricts.

10. Cross Border Links with China. Of the nine official border crossing points with China, in termsof year-round transport accessibility and capacity for further trade growth, only Kodari and Rasuwagadiwould warrant development at present, with Rasuwagadi the more promising site. In consultation withHMGN, China is helping to develop Rasuwagadi as a second main border crossing. While designs for themissing 18 km from Syabrubesi to the border now being prepared by a Chinese technical team, HMGNwill also need to consider upgrading the present Kathmandu-Syabrubesi road to achieve a viablecommercial route overall. The associated arrangements for trade and transit across Nepal’s northern

border will need further consultations and agreement between China, Nepal and possibly India. Once thatand the 18-km road link are completed, an integrated trade and transport project to develop the routefurther may merit financing.

11. Kathmandu – Terai: Fast Track Route. A Fast Track route from the Kathmandu to Terai may bean economically viable investment to reduce substantially the distance, time and cost of transport betweenKathmandu and the border with India. Available studies indicate that a new, more direct route, withtunnels, could reduce the road distance by over 100 km to about 65 km, reduce travel time by up to fivehours and may improve transport reliability. However, given the complex technical and investment issues

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involved, a more detailed feasibility and financial study is needed. This should focus on the two mainoptions - a Bagmati Corridor route linking with the East-West Highway (EWH), or a tunnel route fromKathmandu to Hetauda – relative to the third option of upgrading the existing roads with limited re-alignment (virtually a “do nothing” option). Private finance is likely to be a critical element for the FastTrack development, and for this, HMGN needs to undertake a legal review of its recent BOT Law andstrengthen its private sector participation (PSP) planning and implementation framework, and the

capacities and skills to support this.

12. Overall Recommendation.: Future IDA assistance for development of north – south transportcorridors and improved links to remote districts in Nepal should be part of an integrated HMGN RoadSector Program, which should include:

(a) Finalization by HMGN of a new holistic road sector policy framework with a balanced set ofoutcome-oriented strategic and development policy objectives;

(b) Preparation and promulgation by HMGN of an updated comprehensive ‘roads classification andresponsibility’ framework;

(c) Formulation of a 10-year Road Sector Investment Plan and updating the Medium TermExpenditure Framework to accommodate the finance implications of both the 10-year InvestmentPlan and Road Sector Program;

(d) An enhanced medium-term strategy to sustain a widened reform and organizational strengthening process in DOR, including moving the department to a modern road agency.

13. In formulating these policies, strategies, and plans, HMGN should work closely with all majordonors to achieve greater donor harmonization and improved overall outcomes in the road sector.

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1. BACKGROUND

1.1 While Nepal’s road network expanded by about 7 percent a year in the 1990s, this has stalled inrecent years, down to less than 1 percent a year since 2001, partly due to the impact of the prevailingconflict and security problems, but also due to the marked decline in the allocation of resources to the

road sector, which has declined from about 10 percent of total HMGN budget in the 1990s to 5 percentsince 2001. Today, the main network consists of about 16,000 km of roads (4,627 km of black top, 3,883km of gravel, and 7,490 km of earthen roads), plus there are about 5,000 km village and agriculture roads, bringing the total road network in Nepal to 21,000 km. By regional comparisons, Nepal’s total road stockand network density is very low, while the road network quality and standard is very poor. It is alsounequally distributed, with about 63 percent of the network concentrated in the Terai, while roads in thehill and mountain districts comprise respectively about 33 percent and 4 percent only of the network.This has limited the economic development potential (especially high valued agriculture) and delivery ofsocial services in the more remote hill and mountain districts.

1.2 The proportion of the Strategic Road Network (SRN) in good and fair condition increased fromless than 50 percent in 1992 to 90 percent in 2001, but a recent road condition survey shows that it has

declined to 76 percent. The initial improvement in the condition of the road network throughout the1990’s largely came because of donor and government funded rehabilitation works on the network toovercome the effects of inadequate and irregular maintenance. In recent years, however, as donor programs shifted towards new construction and rural access infrastructure, funding for maintenance has been significantly short of requirement. HMGN has established an autonomous Roads Board and RoadFund with a view to linking road sector funding to road use and improving the level of domestic fundingfor road maintenance. However, the Roads Board, which became operational in 2004, generated onlyabout NRs.300 million (US$4.2 million) in FY2003/2004, only a third of the maintenance requirement of just the SRN. Unless periodic and routine maintenance works are urgently undertaken, it is likely that theroad network will once again deteriorate significantly, with costly rehabilitation consequences.

2. SECTOR ISSUES

2.1 The lack of adequate road infrastructure and transport services in Nepal is attributable largely tothe following key issues: inadequate road sector resource mobilization, ineffective planning andallocation, lack of coherent and integrated sector policies and implementation strategy, weak institutionalcapacity and performance constraints, and the impacts of the ongoing conflict. These are in turndiscussed below.

Road Sector Finances

2.2 Issue: Road sector resource allocation is inadequate and thinly distributed on a large, disparate portfolio, while domestic resource mobilization is weak and poorly administered.

2.3 Government spending in the road sector is only about half of what is required to support thegrowth and poverty reduction targets set out in the Tenth Plan. In order to facilitate a six-percent GDPgrowth rate projected in the Tenth Plan, Nepal needs to invest about 2 percent of its GDP (about US$115million a year) on expanding the road network to remove transport impediments to economic growth, andanother 0.5 percent of its GDP (about US$30 million a year) on maintaining the current road assets. Insum, Nepal needs to invest about 2.5 percent of its GDP (about US$145 million a year) in expanding and

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maintaining its road network 1. However, Table 2 shows that HMGN’s spending in the last three years has been significantly lower than this requirement. For FY04/05, HMGN has allocated about NRs.5.5 billion(US$77 million), which is only about 5 percent of the total HMGN budget. Of this amount, NRs.2.5 billion (US$35 million) is allocated for “Rehabilitation and Maintenance,” but this is funded mostly fromdonor supported periodic maintenance and rehabilitation programs (see Annex 1 for details of budget breakdown).

Table 1: Road Sector Expenditure (US$ Millions)

2002/03 2003/04 2004/05 Source (2004/05)

ForeignBudget Head Actual

Expenditure

Revised

EstimateAllocation HMGN

Grant Loan

Highways 19.7 20.8 11.8 1.8 3.1 7.0

Feeder Roads 5.3 8.1 10.7 2.8 1.4 6.4

Rehabilitation and Maintenance 12.6 15.6 35.0 8.1 6.3 20.6

Recurrent Expenditure 3.0 3.2 3.3 3.3 0.0 0.0

Urban Roads 0.5 0.6 4.4 0.0 4.4 0.3

Bridges 3.4 5.6 11.0 0.0 11.0 1.3

Misc. Projects 9.9 2.7 0.9 0.0 0.9 0.6

Total Road Sector Expenditure 54.5 56.4 77.1 16.1 27.1 36.1

Total HMGN Budget 1,166.75 1,279.27 1,551.25 1,102.50* 213.2 235.5

Source: Ministry of Finance, Red Book.

* Includes domestic borrowing.

2.4 In addition, the low level resources are thinly distributed, which makes the investmentsineffective and unsustainable. Annex 1 lists the Feeder Roads and Highways Portfolio managed by DOR. In all, there are 32 Feeder Roads and 8 highways under construction. Although the Medium TermExpenditure Framework instituted by DOR guides road sector expenditure, there are still politicallymotivated and inefficient projects in the portfolio, which receive inadequate annual allocations. Priority 3

(P3) projects, the lowest ranked priority in the portfolio, for example, receive 40 percent of the total fundsallocated for feeder roads. The rest of the feeder roads in the portfolio receive on average about NRs.15.1million (US$210,000). This covers the cost of constructing only 3 km of earthen feeder road. Yet, theaverage feeder road length is about 85 km, which means that at the current allocation, it takes 28 years forDOR to complete the construction of a feeder road.

2.5 Road Sector Revenue is characterized by week domestic mobilization and heavy dependence onforeign sources. The transport sector is expected to generate NRs.22.3 billion (US$31 million) inFY04/05 in transport related taxes and fees. However, this is only about 40 percent of the current roadsector expenditure allocation, and 20 percent of the estimated need for the road sector. Moreover, only afraction of the road sector revenue (about US$5 million) has been earmarked to the Roads Board inFY04/05. The result is that the road sector is acutely under-funded and depends on foreign sources; about

80 percent of road sector budget in FY04/05 comes from foreign grants and loans (Table 1). Althoughthe establishment of the Road Fund and Roads Board Nepal (RF/RBN) is expected to improve the level ofdomestic funding for road maintenance, the RF/RBN mechanism is still in its infancy, and requiresongoing HMGN policy commitment and support to ensure fuel levies and other revenues generated by the

1 For comparison with other countries, China currently invests about 4 to 5 percent of its GDP on expanding andmaintaining its transport system, while Korea, during its development stage, used to spend about 5.2 percent of its GDP. Brazilspends about 2.4 percent of its GDP, and Bangladesh spends about 2.5 percent of its GDP. Most OECD countries, with maturetransport network, invest about 2 percent of their GDP on maintaining their transport assets.

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road sector are fully and efficiently transferred to the Road Fund. The RBN in turn needs to improve itsorganizational capacity to ensure that it manages the Road Fund efficiently, allocates resources in aneffective manner, monitors the outcomes from RF disbursements and maintains an objective advocacy forthe resource needs of the sector.

Road Sector Policy and Strategy

2.6 Issue: HMGN’s road sector policy and strategy lacks an outcome-oriented focus and a sector-wide approach to guide the development of the sector and coordinate donor support.

2.7 HMGN’s road sector strategy, expressed in the 2001 National Road Transport Policy andsuccessive Five Year Plans, has over-riding political and administrative objectives concerningconnectivity for district headquarters, rather than a more sector-wide focus on development outcomes. In Nepal’s present context, connectivity for district HQ is a vital part of overall national needs but it has been pursued largely in isolation from wider development considerations and outcomes. A more positiveand balanced primary objective would be to provide transport access to isolated populations and likelyeconomic growth centers, regardless of whether they are in connected or unconnected districts. The lackof outcome-oriented road transport strategy has led to considerable previous investments in tracks and

roads that have little or no motorized traffic and hence are unlikely to facilitate local economicdevelopment and generate the wider potential user benefits. The current policy framework should berevised towards a more holistic policy focus on the transport needs of the population and the economy inits diverse forms across Nepal’s regions, with more balanced priority given to the construction andmanagement of feeder roads that are motorable throughout the year.

2.8 Many road corridors are constructed on non-rational grounds, with little investment analysis andwithout a network approach. Thus, the possible provision of access to large settlements living along thecorridor is not directly addressed, limiting the overall benefit of the initial investment. Similarly,maintaining the objective to connect district headquarters as a priority has had the effect of not developingan intra-district transport system in non-road served districts. Many non-road-served districts do notreceive adequate road investment allocations from HMGN on the grounds that they need to be first

connected to the SRN. However, many of these districts are accessible by air, and as has been seen insome mountain districts, some level of intra-district transport system could be developed withconsiderable local benefits, while simultaneously working towards connecting the district headquarterwith the SRN in due course. Therefore, HMGN’s objective to connect district headquarters withmotorable roads should be integrated with the development of a network approach that takes into accountthe road transport access requirements of large settlements within districts.

2.9 The road sector in Nepal operates on a project basis, and is largely driven by donor-funded programs. HMGN does not have a sector wide program that it uses to coordinate and integrate donor programs in the sector. The PIP, prepared in 1997, was a resource-constrained prioritization of roadinvestment and maintenance in the sector, and is based on outdated criteria and data; hence it is no longera fully effective guide to the road sector’s medium-to-longer priorities and circumstances. Early action by

HMGN is warranted on a strategic needs assessment to determine the sector priorities and outcomes, andforecasts of future road sector resources. In particular, HMGN needs to define a set of sustainabledevelopment outcomes for the transport sector, with a suitable balance between strategic ‘connectivity’outcomes and those of a wider socio-economic nature, such as bringing settlements with population of5,000 people or more, within four hours of walking to all weather motorable transport access in a defined period. This kind of outcome-focus sector policy and strategy can help coordinate aid and harmonizedonor practices in the sector, while attracting increased investment in the sector. In parallel, the roadsclassification and responsibility framework for Nepal should be comprehensively revised and updated, toensure clear, realistic and effective attribution of responsibility for all forms of roads to an appropriate

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central, regional and/or district-level ‘owner’. This would also provide a valuable guiding framework forHMGN and RBN roads funding and future performance management across the sector.

Road Sector Institutional Framework

2.10 Issue: DOR implementation capacity for feeder road development in remote districts is

constrained by a combination of poor incentive structures, the distance of its management from remote project sites and its lack of expertise in community-based road works to the extent that, without majorchanges, the DOR would be unable to effectively implement expanded road sector programs.

2.11 The road sector responsibilities are shared between five entities, with overall HMGNcoordination and oversight exercised by the National Planning Commission (NPC). These entities are theMinistry of Physical Planning & Works (MPPW), the Department of Roads (DOR), the Ministry of LocalDevelopment (MOLD), the Department of Local Infrastructure Development & Agriculture Roads(DOLIDAR) and individual District Development Committees (DDCs). The former two entities arenominally responsible for the whole of Nepal’s main road network, and the DOR has particularresponsibility for the SRN. The latter three entities share various responsibilities in the development andmaintenance of district-level roads and have some interests in the planning and development of feeder

roads, although such feeder roads are primarily DOR’s concern. All of these entities are hamperedoperationally by the cumulative consequences of the ongoing conflict and security problems but theseentities are also affected by varying capacity weaknesses, structural and organizational constraints.Planning and implementation performance in the sector to date has not been strong, as these entities havemostly pursued separate planning and implementation processes, achievement of planned targets have not been effectively monitored, their capacity building activities have mostly been project-oriented withoutfocus on sustainable sector-wide performance outcomes, and there has not been an effective performanceincentive framework.

2.12 DOR’s Kathmandu-centered management culture and centralized decision-making processeshave limited its capacity to effectively work in remote areas. The conditions of service for its technicaland managerial staff do not provide for differentiated incentives for staff appointments in remote districts

(with their comparative ‘hardship’ factors) relative to staff appointments in the Kathmandu region, henceDOR has found it very hard to identify staff such as project engineers for remote district appointments, letalone to keep such staff stationed and productive there in remote districts for an effective period.Furthermore, DOR does not presently have adequate skills to carry out effective community-level localconsultations and beneficiary mobilization for road building operations.

2.13 Although the DOR has made considerable progress in key aspects of its technical and managerialcapacity building plans, the department continues to be reliant on significant donor support to dischargeits primary responsibilities at acceptable performance levels. The DOR has been slow to extend theapplication of modernized policies, processes and technology on a more sector-wide basis. While its HQ- based policy, monitoring and support units are inadequately resourced for their ascribed functions, theDOR overall is overstaffed, with 3,500 staff looking after about 4,000 km of the SRN. Performance

assessment in the DOR is not directly based on objective outputs, let alone on outcomes. Sanctions forunder-performance are almost non-existent and there are very few positive performance incentives openlyavailable to the DOR executive and line managers. Accordingly, the department’s present staffing and promotion policies are only broadly influenced by performance considerations and in most cases, havelittle relevance to the outcomes being pursued by the organization.

2.14 These institutional realities present a challenge to HMGN in ensuring DOR’s effectiveness for both its conventional SRN role and a revitalized role in the wider road network development in remoteareas. Building upon the present capacity-building programs underway in DOR, it is now timely (indeed

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urgent) for HMGN to initiate more fundamental enhancements to DOR’s structure, resources,accountabilities and incentive framework, aimed at greater DOR effectiveness in:

• all the facets of SRN development and management, as per HMGN priorities; and

• the development and implementation of major feeder road construction projects and maintenance

programs in remote and/or non-road-connected districts, sector-wide.

2.15 The introduction of new performance and mobility incentives will be needed to enable DORmanagement to motivate skilled staff to accept redeployment into DOR regional offices in remotelocations. At present, there are donor-assisted HMGN initiatives underway on Governance Reform,which are, inter-alia, piloting ‘performance incentives’ and ‘performance management’ mechanisms foreventual implementation in HMGN administration. These mechanisms (once endorsed by HMGN)should be embraced by the DOR for early application in the realignment and devolution of DORoperations to Regional Offices, preferably through an early pilot for ‘performance incentives’ and‘performance management’ program aimed at translating the new roles and performance parameters intooperational practice.

Operating in a Conflict Situation

2.16 Issue: The long-running conflict between HMGN and the Maoist insurgents has hampered,though not always prevented, implementation of development assistance.

2.17 HMGN administrative operations have been disrupted by the insurgency and externally assistedoperations face additional financial and economic costs. Some donor-supported activities are continuing by adopting low-key and neutral approaches. The conflict situation is the major operational issue for anyexpanded feeder road development program in remote areas, especially in the conflict affected Far-Westand Mid-West Regions. Project implementation would be difficult and have high risks, but there is alsothe growing recognition that the conflict-affected areas are those most in need of development assistance2. Thus, any expanded investment program in these areas would have to be based around: (a) an effective

communication strategy to inform the communities of the poverty alleviation and development objectives;and (b) interventions through local road user and other community groups to facilitate participation andmobilization of the affected communities.

2 See, for example, Social Change in Conflict Affected Areas: Assessment Report Prepared for UK Department forInternational Development (DFID) Nepal

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3. NORTH SOUTH TRANSPORT CORRIDOR OPTIONS

3.1 Against the above background and sector issues, HMGN is seeking to further develop its north-south transport corridors. However, as will be discussed below, any development of north south corridorswill have to be part of an overall road sector program. The overall concept of north-south transportcorridors used in this review can be considered as three distinct elements: (a) development of feeder

roads to link unconnected district headquarters with the SRN; (b) construction of additional cross-borderlinks with China; and (c) construction of a new direct link between Kathmandu and the Terai, also knownas the “Fast Track.” This chapter assesses these links separately and provides recommendations thatcould be considered in the development of north-south corridors in Nepal.

Links to District Headquarters

3.2 Current Status. About 1,570 km earthen tracks have been identified in the PIP and other DORdocuments to connect the 17 non-road served district headquarters. Of these, about 758 km have so far been opened to a Fair Weather Earth Track standard. However, motorized transport has yet to start inthese roads because of the poor quality of the road construction and missing links. The status ofindividual road links designed to connect these district headquarters is provided in Annex 2 and are

summarized below:

(a) Eastern Region Districts: Progress in the Eastern Region is the most advanced. Arrangementsare in hand to open the initial access and connect all five remaining non-road-served districts(Sankhuwasabha, Solukhumbu, Bhojpur, Okhaldhunga & Diktel) through other donor supportand the Royal Nepal Army.

(b) Mountain Districts (West & Mid-West Regions): Road access to the five mountain districts wasnot recommended in the PIP. However, given community demands and economic potentials fortourism and trade, HMGN and the concerned communities have been carrying out civil works toopen track access. However, because of the low level of investment and lack of donor support, progress has been slow. The Royal Nepal Army is currently working to open track access alongthe Baglung-Beni-Jomson road and other districts, but the pace is going slow at the rate of 10 km per year.

(c) Mid-Western Hill Districts: Access to Jumla and Kalikot will be achieved through thecompletion of the 220 km Karnali Highway. With support from IDA-financed Road Maintenanceand Development Project (RMDP), 112 km of the Karnali Highway was completed. HMGN plans to complete the road from 112 km to 180 km using the Royal Nepal Army, and the final 40km to Jumla using local community road building groups, financed under the restructured RMDP.Once opened, the road will require upgrading to all-weather standards. Progress in connectingthe other two Mid-Western Hill districts, Jajarkot and Rukum, has been slow. Both districts arein the heartlands of the Maoist insurgency and road construction activity is suspended. It isunlikely that these districts will be connected in the current plan period.

(d) Far-Western Hill Districts: RMDP supported road construction activities in Bajura (Martadi),

Bajhang (Chainpur) and Darchula have been suspended due to the security situation. HMGN iscontinuing the works using its own resources and with support from the Royal Nepal Army.

3.3 Next Steps: It is clear from the above and Annex 2 that substantial works need to be done inorder to complete the initial track access to district headquarters, as well as upgrading tracks once openedto all weather road standard in order to ensure that investments are effective and provide the intended benefits. Furthermore, additional roads need to be identified and developed in order to provide a networkof road spur accesses to link settlements along the corridor. While the PIP identified the initial trackaccess to district headquarters, HMGN/DOR do not have a well-defined policy and strategy to provide all

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weather road transport services on a network basis to isolated settlements. DOR has recently drafted aTwenty Year Master Plan, which mainly focuses on opening access to district headquarters, connectingsecond east-west highway and upgrading postal roads in the Terai. As discussed above, simplyconstructing access tracks/roads may not meet the development objective of providing transport access toisolated population. Therefore, it is recommended that HMGN develop a road sector program, aimed atconnecting settlements with large number of people with all weather motorable roads. This would require

a survey of settlements currently not served by all weather road and taking inventory of previousinvestments and associated missing links, as well as identifying new links and grids to connect large population settlements. A recent quick accessibility mapping study by DOLIDAR regarding percentageof population having access to all weather road transport has been carried out. This study revealed thatabout 39% of the people in the hills do not have motorable all weather access within four hours walk andabout 13% of the Terai people have to walk more than two hours to reach an all weather road head. DORis in the process of carrying out a study to develop an investment program to provide optimumaccessibility for remote population of the Mountains, Hills and the Terai. Based on this program, anupdated PIP for the development and maintenance of strategic road network and an OrganizationalReform Action Plan is expected to be ready by December 2006. DOLIDAR has also drafted a long termRural Transport Sector plan based on the Local Infrastructure Development Policy (2004).

Cross Border Links with China

3.4 Current Status: There are nine official border crossing points with China but only one mainroad link crossing at Kodari. The other official border crossing points, as well as a number of informallocal crossing points are trails with unrecorded, often barter, trade and have severe access restrictionsduring the winter and monsoon months. Kodari is connected by all-weather gravel roads on both sides ofthe border and handles approximately 8% (value) of Nepal’s total trade, with a substantial (70%) importimbalance. The Kodari crossing would be a severe bottleneck if trade flows through China expandedsubstantially. This is because:

• the first 35 km of the Friendship Highway from the border, within Tibet, crosses an unstablegeological area, is in poor condition and subject to frequent slides and closures;

• the actual border is located on a bridge within a steep-sided valley and has difficult approachroads on both sides of the border; and

• there are minimal opportunities to improve or expand the facilities on either side of the border.The available space is restricted with limited parking for trucks and has become seriouslycongested in recent years.

The above factors have contributed to a demand for a second road border crossing to accommodate thecontinuing growth in trade and possibly in the future, transit flows.

3.5 Rasuwagadi is being developed by the Chinese (in consultation with the Nepalese) as a secondmain road crossing. A Chinese technical team is surveying the route and will prepare the designs for the

missing 18 km from the border to the existing road at Syabrubesi. Adequate land is available at (or near)the border for the necessary immigration and customs facilities. However, to develop a viablecommercial route, the existing road from Kathmandu to Syabrubesi will also need upgrading.

3.6 The status of the other official crossing points is outlined in Table 2. It is very unlikely that anyof these links will need to be developed for substantial trade flows in the foreseeable future. However,road links through China may provide the access to some of the remote districts which is not availablefrom within Nepal.

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Table 2: Existing Nepal-Tibet Border Crossings

Location

(from East to West)

Nepal Side Tibetan Side

Olangchunggola Nearest road head at Taplejung, approx 100 kmto south

Nearest town 22 km; no road; withinChomolungma Conservation Area

Kimathanka Nearest (proposed) road-head at Khandbari (100km south); local (village) roads proposed

No road; border settlement on Arun River;nearest village road 6 km; in ChomolungmaConservation Area

Lamabagar On historic trade route north ofCharikot/Dolakha; no motorable road

Village road approx 10 km to north; inChomolungma Conservation Area

Larke No connection is available or proposed to linkwith existing road at Gorkha (150 km)

Nearest village and local road approx 10 kmdistant

Mustang Approach within Nepal would be along KaliGandaki Valley within the AnnapurnaConservation Area

Local standard road exists up to (and across) the border; some trucks operate to Lo Mantang

Namja Pass (Mugu) Very remote unpopulated area of northern Mugu;existing customs post 15 km from border

Nearest village and road is 50km distant: no proposals to provide link

Yari/Hilsa Local Road under construction (85 km) linkingSimikot (District HQ) with border (Hilsa)

Provincial Highway (S207) under constructionlinking with Highway 219 (27 km); access toBurang

3.7 Next Steps: Future cross-border links with China will be limited to the development ofRasuwagadi as a major trade route. However, before any further investment is contemplated, discussions between China and Nepal (possibly also including India) should be concluded to ensure that thearrangements for trade and transit, across Nepal’s northern border, are clearly understood and agreed to.Once the trade agreements and the 18-km road link are in place, HMGN should consider an integratedtrade and transport project to develop the route, including the upgrading of the road to Dhunche.

Kathmandu – Terai: FAST TRACK ROUTE

3.8 Rationale for Fast Track Route: The objective of a Fast Track route is to reduce substantiallythe distance, time and cost of transport between Kathmandu and the Terai/Indian Border. The existingroutes are indirect and very lengthy. As the crow flies, the distance between Kathmandu and Hetauda is40 km, the main road via Mugling and Narayanghat is 220 km. A more direct route, with tunnels, couldreduce the road distance to about 65 km and reduce travel time by up to five hours. A Fast Track routemay also improve transport reliability as the existing road is subject to frequent closure/disruption duringthe monsoon, which increases the transport costs of goods. A Fast Track route would also facilitate thedevelopment of a potential transit link, between India and China, generating the transit earnings for Nepal.

3.9 The Fast Track route has been discussed within Nepal for the last three decades3 but the high cost

and more pressing priorities have prevented its realization. However, a number of factors may now givethe Fast Track route higher priority:

• Traffic on the Kathmandu-Terai route has been growing by about 10% annually;

• The Road Fund will provide secure funding for road maintenance and there is less likelihood thata Fast Track route will seriously distort sector expenditures;

3 Kathmandu-Birgunj Corridor Feasibility Study prepared by COMTEC in collaboration with Alpine and Macchi for

UN-HMG in March 1974

15




• Development of rural roads has been decentralized to districts, thus shifting the responsibility forrural roads to districts and allowing the center to concentrate on SRN;

• Legislation now provides for private financing of infrastructure. The Fast Track route is proposed as a public-private partnership (PPP) and there appears to be significant private sectorinterests;

• Advances in tunneling techniques and improved maintenance arrangements may reduce some ofthe previous environmental and technical concerns.

3.10 The potential case for the Fast Track may thus now be stronger and HMGN should investigate theopportunities for construction and funding, including a full re-assessment of the costs and risks involved.

3.11 Previous Studies of Fast Track Options: Previous studies4 have examined a number ofalignments for a direct route between Kathmandu and Terai. The alignment options are:

• a tunnel route from Kathmandu to Hetauda, plus options for a new alignment or upgrading theexisting road to the Indian border;

• a Bagmati Corridor route to link with the East-West Highway (EWH), plus options to connect

with (or terminate at) Hetauda; and

• upgrade the existing roads with limited re-alignment, the “do nothing” option.

3.12 Tunnel Route Option: The total length of the proposed route to Heatuda is 65 km and wouldrequire almost 30 km of completely new road, including three sections of tunnel, totaling 7 km. The costhas been estimated at NRs.9.4 billion – NRs.12.2 billion (US$130 – US$170 million). The studiesconcluded that the tunnel route would have generated acceptable economic returns and could potentiallyoffer reasonable financial returns to a private investor. The higher than forecast traffic growth, since thestudies, will have raised the benefits, though it is also possible that the construction costs may haveincreased in real terms.

3.13 Bagmati Corridor Option: A study of potential alternative Fast Track routes, without tunneling,has recently been completed (April 2003) for the DOR. The study estimated that a Fast Track route alongthe Bagmati river would cost about NRs.6.1 billion (US$85 million). Based on this cost estimate andtraffic projections, the study concluded that Bagmati Corridor option would be more cost-effective than aTunnel option.

3.14 While the Bagmati corridor is preferred in the latest study, it is strongly recommended that a fullfeasibility study should be undertaken of the two options before a decision is made on which option tofollow. In particular, a new study is required because of the following:

• All previous studies including the Bagmati Corridor Study are very preliminary in nature;

• The studies looking at the tunnel and no-tunnel options were carried out at different times andusing different assumptions, and therefore, cannot be compared to make a decision on whichoption is preferred; and

• The studies do not look into options for private sector participation in the Fast Track.

4 See list in Annex 3.

16




3.15 Therefore, it is recommended that a new detailed feasibility study is undertaken of the twooptions, using the same basic economic, traffic and engineering parameters, a consistent methodology,and the same level of engineering detail. The study should give close attention to the environmentalimpacts and potential engineering risks attached to each of the options. On this basis, a marginal benefitanalysis should be carried out to make a decision on which option provides better economic returns.

Private Sector Participation

3.16 The Framework for Private Sector Participation (PSP): Private finance is likely to become acritical element for the development of the Fast Track and is the major impetus for HMGN’s renewedinterest. HMGN expects that it will not be able to fund the major elements of the potential project in thecurrent fiscal environment. However, experience in other countries also suggests that the private sector isunlikely to deliver such a project without substantial government involvement in the form of enablinglegislation, provision of land, environmental and social protection, and possibly financial guaranteesand/or some measure of co-financing. HMGN will need to establish a suitable enabling environment ifthe Fast Track route is to be developed through PSP.

3.17 The following are considered the key prerequisites for a successful PSP for the Fast Track.

• Conducive Legislative and Regulatory Environment : Nepal’s BOT law has recently been issued, but the private sector response has not yet been tested. HMGN should explain its BOT law todomestic and international private investors, through investor conferences, and obtain theinvestors reaction. It is also recommended that a legal review is undertaken on the BOT law toensure that it meets international standards and will be capable of attractive private investment inthe sector;

• Institutional arrangements for PSP : HMGN has established a BOT Cell in MPPW but it does nothave the necessary staff or skills and strengthening it will be essential. In addition, a SpecialPurpose Vehicle may need to be established to develop the Fast Track route on behalf of HMGN;

• Risks and Risk Management : HMGN needs to be clear about the types and quantity of risks itwishes to transfer to the private sector. For the Fast Track corridor, the risks would includeconstruction, geological, traffic, regulatory and security; all would need to be allocated betweenHMGN and the private investors;

• Direct or indirect Public Support : HMGN can adjust the distribution of risks by financialsupport. Soft loans or grants are the most common form of public funding5 and given the heavycost of the Fast Track corridor, significant public support may be necessary. HMGN should workwith its development partners to provide the public support as part of the PPP scheme. The likelyscale of public support should form part of a detailed feasibility study.

• Due Diligence for PSP : HMGN needs to be sure that the use of private finance is properly

considered and fully justified. PSP projects require very considerable due diligence by the clientas well as the investor. HMGN needs to establish that (a) value for money will be obtained when providing public support; and (b) consumer interests will be protected. Some governments6 havea detailed Public Sector Comparator process to undertake this due diligence.

5 In India, the toll structure is fixed by government in the bidding and BOT concessions are awarded on the basis of theminimum grant required.

6 Such as Canada, the State of Victoria in Australia and the UK.

17




3.18 Next Steps: The available studies indicate that a new route, from the Terai to Kathmandu, could potentially be economically and financially viable. However, more detailed studies are needed before anydecisions are taken on either of the route, as well as the financing mechanism. It is recommended thatHMGN commission a full feasibility study which would also identify the most suitable PSP model(s).The proposed study should examine the available options and issues including: construction and financingrisks, design standards, alternative alignments and connections, potential environmental and social risks

and impacts, and potential funding and operational modalities. The study should provide constructioncost estimates (±20 percent) and an assessment of the risks and degree of uncertainty surrounding anytunneling costs. Based on the findings of the study, HMGN should take decisions on the project and itsfinancing.

4. CONCLUSIONS AND RECOMMENDATIONS

4.1 Based on the above strategy analysis and discussions with HMGN, the followingrecommendations can be made for the development of north – south transport corridors:

• Further investment for cross-border linkages with China should be postponed until the missing 18km link is constructed and cross-border trade and transit arrangements are agreed; and

• A comprehensive feasibility study of the preferred Fast Track option(s) is essential and can befinanced through bilateral grants if available. IDA could provide advisory services to strengthenthe recently established BOT Cell in MPPW and ensure that private sector participation in theFast Track and other PPP initiatives are implemented within a conducive regulatory andinstitutional framework.

4.2 Before seeking donor support for north south links to district headquarters (and any associatedfeeder road works), it should be confirmed that such a plan is part of an overall Road Sector Program(RSP) prepared by HMGN (for which IDA is providing support) and aimed at meeting the key HMGNobjectives and outcomes in the road sector. However, any agreement on funding for such an RSP should be conditional on:

• finalization, by HMGN, of a new holistic policy framework for the road sector, comprising a balanced set of outcome-oriented strategic and development policy objectives;

• promulgation of an updated comprehensive ‘roads classification and responsibility’ framework;

• preparation of a 10-year Road Sector Investment Plan and an updated, realistic Medium TermExpenditure Framework, accommodating the finance implications of the proposed Road SectorProgram; and

• a medium-term strategy to sustain the reform and organizational strengthening process in DOR,emphasizing sector-wide application of new processes and capacities, improved performance andaccountability, and effective devolution to regional units for both SRN and FR purposes.

4.3 In formulating these policies, strategies, and plans, HMGN should work closely with all majordonors to achieve greater donor harmonization and improved overall outcomes in the road sector.

18




Annex 1: DOR Road Sector Portfolio (US$ Millions)

2002/03 2003/04 2004/05Source (2004/05)(in USD Million)

Foreign

Budget Head(Feeder Roads)

PriorityCode Actual

ExpenditureRevised

EstimateAllocation HMG

Grant Loan

Other Central Level Ongoing Projects P3 1.8 2.3 4.1 1.0 - 3.1

Ilam-Mai-Pokhari-Sandakpur P2 0.0 0.1 0.1 0.0 - 0.0

Fikle - Sree Antu Danda 0.0 0.0 0.0 - - -

Bansantpur-Terhathum-Athrai P2 0.1 0.1 0.1 0.1 - 0.1

Basantpur-Chainpur-Khandbari P1 0.2 0.0 0.0 - - -

Naradmuni Thulung Highway - Hile LeguwaghatBhojpur P1 0.2 0.9 1.7 0.6 1.1 -

Katari-Okhaldhunga P2 0.4 0.4 0.4 0.0 - 0.4

Paspalal Highway-Nayapul Khimti-Manthali-Ramechhap Road - New Bridges P2 0.1 0.1 0.1 0.1 - -

Chkrapath-Tokha-Jhor-Chahare-Gurje Bhanjyang-Chahare-Talakhu Including Chhahare Bride P2 0.1 0.2 0.3 0.0 - 0.2

Galchhi-Devighat - Including Bridges P2 0.2 0.1 0.2 0.0 - 0.1

Ganeshman Singh Marg - Thankot - Chitlang 0.0 0.0 0.1 0.0 - 0.1

Lumbini Garden Road -upto MRM 0.0 0.0 0.0 - - -

Baglung-Beni-Jomsom P1 0.2 0.3 0.5 0.0 - 0.4

Chhinchu-Jajarkot P1 0.1 1.0 0.4 0.0 - 0.4

Surkhet-Ranimatta-Dailekh P1 0.2 0.1 0.1 0.0 - 0.1

Jaya Prithvi Bd. Singh Highway - Khodape-Bajhang P1 0.1 0.3 0.3 0.0 - 0.2

Sanfebagar-Marthadi P1 0.1 0.4 0.4 0.1 - 0.3

Sanfebagar-Mangalsen P1 0.0 0.1 0.2 0.1 - 0.1

Dasharath Chanda Highway, Satbanj-Baitadi-Jhulaghat P2 0.0 0.1 0.1 0.0 - 0.1

Gangte Labdhu Samundratar Galphubhajan Road- Including Dorkhu Bridge P3 0.1 0.1 0.1 0.0 - 0.1

Postal Roads P2 0.3 0.1 0.2 0.0 - 0.2

Damak Chisapani P2 0.1 0.1 0.1 0.1 - -

Chatara - Gaighat - Kattari P2 0.0 0.1 0.1 0.0 0.0 -

Tallo Dhungaswor Satkhamba Dullu PipalkotDailekh P2 0.0 0.1 0.1 0.1 - -

Holeri Chunwang 0.1 0.1 0.0 - - -

Kalakate - Gadhawa - Sikta P2 0.0 0.1 0.1 0.1 - -

Dabasthal Kainidanda Chaurjahari-Dolpa P2 0.1 0.1 0.2 0.0 - 0.2

Gumi Patihalna Chour Surkhet P2 0.0 0.1 0.1 0.1 - -

Trishuli-Syaprubesi - Rasuwagadhi P1 0.0 0.0 0.2 0.1 0.1 -

Tanakpur Link Road P1 0.2 0.0 0.2 0.0 0.1 -

Karnali Highway-Manma, Kalikot 0.2 0.4 0.0 - - -

Musikot-Burtibang P2 0.2 0.2 0.3 0.1 - 0.2

0.0 0.0 0.0 -

Total Allocation on Feeder Roads 5.3 8.1 10.7 2.8 1.4 6.4

Average Feeder Road Allocation 0.17 0.25 0.33Average Feeder Road Allocation (without P3projects) 0.11 0.19 0.21

19



2002/03 2003/04 2004/05Source (2004/05) (in USD

Million)

Foreign

Budget Head(Highways)

PriorityCode Actual

ExpenditureRevised

EstimateAllocation HMG

Grant Loan

Mechi Highway (Phidim-Taplejung Section) 0.2 0.2 - - - -

Sagarmatha Highway (Gaighat-Diktel Section) 0.1 0.1 - - - -

Bishesor Prasad Koirala Highway - Banepa,Sindhuli, Bardibas P1 18.9 16.2 3.4 0.3 3.1 -

Rapti Highway P1 0.2 0.3 0.6 0.1 - 0.5

Karnali Highway (Surkhet-Jumla Section) P1 0.1 2.6 6.4 1.0 - 5.4

Mahakali Highway (Baitadi-Darchula Section) P1 0.2 1.2 1.4 0.3 - 1.1

Kanti Rajpath P2 0.1 0.1 0.1 0.1 - -

Tribhuvan Rajpath - 0.1 - - - -

Total Highways Expenditure 19.7 20.8 11.8 1.8 3.1 7.0

Average Highways Allocation 2.82 2.97 1.69

Average Highways allocation with outBishesor Prasad Koirala Highway - Banepa,Sindhuli, Bardiba 0.14 0.76 1.41

2002/03 2003/04 Source

HMG ForeignBudget Head

(Rehabilitation and Maintenance)Priorit

yCode

ActualExpenditure

RevisedEstimate

2004/05Allocation

Total Grant Loan

Other Urban Roads 0.2 0.3 0.0 0.0 0.0 0.0

Various Road Repair & Maintenance P1 3.9 3.9 6.1 1.3 4.2 0.6

Road maintenance & Development Project P1 6.9 8.4 10.8 1.7 0.0 9.1

Mirchaiya - Katari Road 0.0 0.0 0.0 0.0 0.0 0.0

Araniko Highway Repair and Maintenance Project P1 0.9 0.0 0.3 0.1 0.0 0.2

Beshisahar-Chame P1 0.2 0.2 0.3 0.1 0.0 0.2

Gorusinghe-Sandhikhark 0.1 0.0 0.0 0.0 0.0 0.0

Chakchake-Liwang - Including Bridges and OthersRoads P2 0.1 0.2 0.1 0.0 0.0 0.1

Road Network Development Project - Fourth RoadImprovement P1 0.3 1.2 12.4 3.2 2.1 7.1

Road Board P2 0.0 1.4 5.0 1.7 0.0 3.4

0.0 0.0 0.0 0.0 0.0 0.0

Total Exp on Rehab and Maint 12.6 15.6 35.0 8.1 6.3 20.6


20

DOR Road Sector Portfolio (US$ Millions)



N e p a l : N o r t h S o u t h T r a n s p o r t C o r r i d o r O p t i o n s

I D A S t

r a t e g y N o t e

2 1

A n n e x 2

S t a t u s o f N o r t

h S o u t h L i n k s t o D i s t r i c t H e a d q u a r t e r s

S N

D i s t r i c t / H Q

N - S C o r r i d o r

R o a d

L e n g t h

( k m )

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C o m p l e t e d

K M R e m a i n i n g K

M P r o p o s e d

f o

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D O N O R / H M G N

W o r k i n g o n

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r e s s S o F a r

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1

S a n k h u w a s a b w a / K h a n d b a r i A r u n C o r r i d o r

B a s a n t a p u r -

K h a n d b a r i

9 6

5 6

4 0

9 6 A D B

R A P p r o g r e s s i n g

2

S o l o k h u m b u / S a l l e r i

A r u n C o r r i d o r

O k h a l d h u n g a -

S a l l e r i

4 3

0

4 3

4 3 A D B - R u r a l

A D B - U p p e r S

a g a r m a t h a P r o j e c t

P r o g r e s s i n g

3

B h o j p u r


H i l e - B h o j p u r

8 4

2 6

5 8

8 4 D F I D

R A P p r o g r e s s i n g

4

O k h a l d h u n g a


K a t a r i - O k h a l d h u n g a

6 5

6 5

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4 2 R M D P

D e s i g n w o r k o n g o i n g

5

K h o t a n g / D i n t e l


G a i g h a t - D i k t e l

1 0 2

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a b a n d o n e d

H M G

N e w r o u t e O k

h a l d h u n g a - D i k t e l

t a k e n b y D F I D R A P

S u b T o t a l E a s t e r n

3 9 0

1 7 7

1 4 1

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W e s t e r n D e v e l o p m e n t R e g i o n

6

M a n a n g / C h a m e

7 5

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7 5 A r m y

O n g o i n g a b o u t 1 0 / 1 2 k m e a c h

y e a r

7

M u s t a n g / J o m o s o m

G a l i k a n d a k i

B a g l u n g - B e n i -

J o m s o m

9 6

4 0

5 6

9 6 A r m y

O n g o i n g a b o u t 1 0 / 1 2 k m e a c h

y e a r

S u b T o t a l W e s t e r n

1 7 1

7 0

1 0 1

1 7 1

M i d W e s t e r n D e v e l o p m e n t R e g i o n

8

D o l p a / D u n a i

1 1 0

1 1 0

9

J u m l a ( f r o m K a l i k o t )

K a r n a l i R a j m a r g

K a l i k o t - J u m l a

1 3 6

2 8

1 0 8

1 3 6 A r m y

W o r k s a w a r d e d t o A r m y e x c e p t f o r

3 6 k m C B O b

a s e d w o r k u n d e r

R M D P .

1 0 K a l i k o t / M a n m a

K a r n a l i R a j m a r g

S u r k h e t - K a l i k o t -

M a n m a

1 0 6

8 4

2 2

1 0 6 A r m y

W o r k s a w a r d e d t o a r m y .

1 1 M u g u / G a m g a d h i

5 6

5 6

1 2 H u m l a / S i m i k o t

J u m l a - S i m i k o t

1 1 0

1 1 0

1 3 J a j a r k o t

R a t n a R a j m a r g

C h i n c h i - J a j o r k o t

1 0 7

6 6

4 1

1 0 7

W o r k s w i l l b e

a w a r d e d t o A r m y

n e x t F Y .

1 4 R u k u m / M u s i k o t

R a p t i R a j m a r g

S a l y a n - M u s i k o t

1 0 6

1 0 6

0

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R o a d o p e n e d

S u b T o t a l M i d W e s t e r n

7 3 1

2 8 4

4 4 7

4 5 5

F a r W e s t e r n D e v e l o p m e n t R e

g i o n

1 5 B a j u r a / M a r t a d i

M a h a k a l i R a j m a r g

S a n f e b a g a r - M a r t a d i

5 2

3 0

2 2

5 2

W o r k s w i l l b e

a w a r d e d t o A r m y

n e x t F Y .

1 6 B a j h a n g / C h a i n p u r


K h o d p e - B a h j a n g

1 1 0

9 5

1 5

1 1 0 H M G

C o n t r a c t s a w a r d e d

1 7 D a r c h u l a


S a t b a n j - D a r c h u l a

1 2 0

1 0 2

1 8

1 2 0 H M G

C o n t r a c t s a w a r d e d

S u b T o t a l F a r W e s t e r n

2 8 2

2 2 7

5 5

2 8 2

G r a n d T o t a l

1 5 7 4

7 5 8

7 4 4

1 1 7 3




Annex 3. List of Previous Studies on Fast Track Route between Kathmandu and Terai

1. Kathmandu-Birgunj Corridor Feasibility Study (March 1974) by COMTEC in collaboration withAlpine and Macchi for UN-HMG.

2. Aid Proposal on Kathmandu - Hetauda Highway Tunnel Project (September 1990) by NIPPONKOEI Co. Ltd.

3. Direct Link between Hetauda and Kathmandu, Nepal. Pre-feasibility Study (June 1993) byFINNIDA.

4. Feasibility Study of the Bagmati Corridor Road (April 2003) by Nepal Engineering ConsultancyServices Center Ltd (NEPECON).

north south corridor

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