Just ahead of a planned signing of new memorandum of understanding (MoU) to revive the venerable 1,700km Postal Road, India has said it will not be able to allocate additional budget for the project. It has also put forth a condition that an Indian consultant be appointed.

Signing of the new MoU to expedite the tattered Postal Road that extends along the length of the southern Tarai plains has been among the top agendas during the Prime Minister KP Sharma Oli’s visit to India on Friday.

India’s Ministry of External Affairs on Thursday forwarded its latest position on the project to Nepal’s Ministry of Foreign Affairs and Indian Embassy in Nepal.

India has agreed to Nepal’s proposal of building 600km of the road in the first phase with Indian financial assistance, but the southern neighbour has disagreed to the proposal of expanding the road into two lanes and injecting additional funds. Under the proposed new MoU, government officials had predicted the costs for first phase of the project to increase to IRs9 billion from previously-estimated IRs7 billion. The total project cost would also swell from the previous estimate of IRs29 billion. Around 130 bridges have to be built along the road.

The improvement of the Postal Road that has been accorded priority for the development of Tarai-Madhes began in 2010 after the signing of a bilateral agreement in 2007. However, the project failed to make progress due to the negligence of the contractor.  The road that stretches from Jhapa to Kanchanpur has not been maintained for the last two years after the construction company and the consultant abandoned the project without notice.

The road connects 20 Tarai districts, and around 75 percent of the Tarai villages will be connected with the road network, technicians said. So far, 30 percent of the project has been completed, and vehicles have been plying the dirt road.

Parsa Chief District Officer Keshav Raj Ghimire said that a majority of landowners had already received compensation. “Work had been delayed due to the Tarai protest and border obstruction,” said Ghimire.

According to the District Administration Office, Rs80 million has been distributed in compensation till date.

The contractor fled while working on the Laxamanwa-Thori stretch in Birgunj.

Parsa Wildlife Reserve, through which the Postal Road passes, has forbidden the authorities to construct bridges within the protected area.

Engineer Manish Singh said they had been unable to complete the construction of four bridges in Thute Khola and other places.

Vishwa Construction of Hyderabad, India, which had been contracted to build the sections in Bara and Parsa districts, had walked out two years ago without completing the contract.