Ambitious Infrastructure ‘Takeoff’ Targets Set with Prioritized Resources and Aggressive Reforms

The government has allocated a budget exceeding NPR 3.02 trillion for the newly formed Ministry of Infrastructure Development, established through the merger of various physical ministries. The plan for the upcoming fiscal year includes blacktopping 1,000 kilometers of road and launching the Nagdhunga tunnel route starting from the month of Shrawan. Additionally, the government has announced the operation of an alternative development finance fund to attract private investment in infrastructure and will permit the private sector to engage in electricity trading.

On 15th Jestha in Kathmandu, the government has resolved to implement aggressive reforms to address structural issues observed in infrastructure projects. These measures aim to initiate a ‘takeoff’ phase for stalled infrastructure development. Led by Balendra Shah, the government consolidated ministries responsible for physical construction into a powerful Ministry of Infrastructure Development, which has received the highest budget allocation—over NPR 3.02 trillion.

According to Finance Minister Dr. Swarnim Wagle, the government will accelerate operational reforms in the coming fiscal year, positively impacting the pace and coordination of capital expenditures. Procurement processes will be improved, and resource management will adopt greater flexibility. Alternative financing mechanisms will be introduced, with stability maintained for project leaders to ensure projects are completed within designated costs and timelines under a ‘mission mode’ approach.

The budget also announced the enactment of a Sunset Law to address challenges posed by long-term legislation. This law provides for automatic review and expiration of laws after a specific period and will be presented to Parliament. Furthermore, advance mobilization payments will be strictly tracked and monitored to ensure they are used solely for their respective projects in the upcoming fiscal year.

Finance Minister Wagle also stated that an initial list of infrastructure projects suitable for the hybrid NUT model will be prepared within three months. In response to cost increases for fuel, bitumen, and construction materials caused by the Middle East conflict, the government is committed to taking necessary measures to address difficulties faced by construction businesses.

Prior to the budget announcement, umbrella organizations representing Nepal’s private sector had urged the government to resolve challenges encountered by construction entrepreneurs.

Integrated Model for Infrastructure Development

The current budget introduces the concept of an integrated infrastructure construction model. Previously, lack of coordination among development ministries led to operational inefficiencies. As per Finance Minister Wagle, sectors including roads, transportation, water supply, sanitation, and financial access infrastructure will be developed in a unified manner. The plan also incorporates efforts to enhance travel safety by improving road quality to reduce human casualties from accidents.

Reconciling Development and Environment

The government has also put forward plans to reconcile conflicts between development and environmental conservation. Finance Minister Wagle stated that amendments will be made to the Environment Protection Act 2076 and Forest Act 2076. The budget specifies that when the approved Environmental Impact Assessment reports indicate a reduction in forest area or tree removal, supplementary assessments will not be required. Additionally, procedures for forest area approval and tree cutting decisions will be simplified.