ADB funds $195m for improvements to trade corridors in Nepal
The Asian Development Bank (ADB) has approved a $195 million loan to improve the highway between Pokhara and Mugling in Nepal, which links Pokhara to Kathmandu and to the sub-regional corridors that connect Nepal with India and Bangladesh.
“The project will boost the traffic capacity, reliability, and safety of the main road link from Pokhara,” said ADB Transport Specialist Mr. Johan Georget, “The highway will be widened to four lanes, and this will reduce travel times, lower transport costs, and improve access to domestic markets, jobs, and social services. The upgraded highway will also open a wider gateway for Nepal to international markets, especially in India, and facilitate the arrivals of tourists to the region of Pokhara and its hinterland.”
Nepal has experienced economic growth improving year on average between fiscal years (FY) 2017 and 2019 to 7.3%, compared with about 3.3% in the previous three years.
A landlocked country, Nepal relies heavily on neighbors for international trade, mainly India, which trades 65% of Nepal’s imports and exports in 2019.
While roads are the predominant mode of transport in Nepal for 90% of goods and passengers, the capacity of the road network remains low. This infrastructure deficiency is a big hamper on the economy, which results in higher costs and travel times, thus impeding development of competitive supply chains, tourism, and regional trade.
The 200 kilometre trip from Pokhara, which is a prime destination for tourists at the foot of the Himalayas, is a 5 hour journey by road from the Nepalese capital Kathmandu. The road is two lane highway, and handles about 7,400 vehicles per day. Upgrading the national highways in Nepal is a priority to support economic development as vehicle traffic is expected to quadruple by 2029.
This project will facilitate the widening of 81 km of highway to four lanes from Pokhara to Abukhaireni to meet the expected demand. Improvements to be made include surfacing, structure, and drainage, with safety measures such as crash barriers, and traffic and other warning light systems installed.
A further 8 km section between Mugling and Abukhaireni will be considered in a subsequent project.
A median will divide the new highway section, and service lanes in urban areas will be installed to improve safety, especially for pedestrians, bicycles, and motorcycle users. This is vital as Nepal suffers a high rate of 16 deaths per 100,000, just due to traffic. Maintenance contracts of 5 years will strengthen road management and maintenance going forward.
A landslide monitoring and management system will also be installed to strengthen the country’s disaster resilience.
The total cost of this project is $254 million, with the government funding $59 million.
The project is due for completion by the end of 2025.
Accompanying the ADB loan is a technical assistance grant of $500,000 for disaster risk reduction, landslide management, road safety measures, and procurement for the Ministry of Physical Infrastructure and Transport and Department of Roads.
The Asian Development Bank is committed to encouraging a prosperous, inclusive, resilient, and sustainable Asia and Pacific, whilst sustaining efforts to eradicate extreme poverty.
In 2018, ADB made commitments of new loans and grants amounting to $21.6 billion. Established in 1966, the development bank is owned by 68 members, 49 from the region.