Nepal and China signed a memorandum of understanding on Sunday under which China will help build two stretches of the road linking Kathmandu and Rasuwagadhi. The road will include two tunnels.

The agreement was signed between Nepal’s Ministry of Finance and the China International Development Cooperation Agency in Kathmandu on Sunday, hours before Chinese President Xi Jinping concluded his two-day state visit to Nepal.

The first stretch of the road will be 32-km long—from Tokha in Kathmandu to Chhahare in Nuwakot—with a 4.17-km tunnel. The second 19-km stretch will link Mailung with Syaphrubesi in Rasuwa district, according to officials at the Finance Ministry and the Ministry of Physical Infrastructure and Transport. This stretch will consist of several small tunnels due to frequent landslides, according to an official with the Department of Roads. The entire road is part of Nepal and China’s bid to enhance connectivity and ease trade through the Kerung-Rasuwagadhi border.

When complete, the project will reduce both distance and travel time between Kathmandu and Rasuwagadhi, according to officials at the Road Department.

“But a feasibility study has yet to take place. So the construction will not take place immediately, despite an agreement with China,” said Arjun Jung Thapa, chief of the foreign coordination division at the Department of Roads. “It may take around three years to prepare a detailed project report because it’s a complex project.”

As per a joint statement issued by Nepal and China after Xi’s visit, the two sides have agreed to proactively cooperate on the feasibility study for the construction of the tunnels along the road from the Chinese border town of Jilong/Kerung to Kathmandu.

“The agreement signed on Sunday is just for a feasibility study,” said Dil Bahadur Chhetry, an undersecretary at the Finance Ministry who oversees China affairs. “The study will be carried out with a grant.”

According to Chhetry, separate agreements have to be signed for construction works. The Chinese side has also said the implementation of the project should be done “step-by-step”.

Earlier, the Department of Roads had conducted a feasibility study for the Tokha-Chhahare tunnel. Without a tunnel, the distance between Tokha and Chhahare will be 44 km. According to Thapa, the road cannot function as a two-lane highway without the tunnel.

This road will link another road connecting Rasuwagadhi from Dhading’s Galchhi at the Gongote area of Nuwakot. From Gongote, there will be a single road connecting Rasuwagadhi via Betrawati and Syaphrubesi.

“Currently, the Kathmandu-Rasuwagadhi road is around 125 km long. This distance will be reduced once this project is executed,” said Thapa.

Talks about upgrading the Kathmandu-Rasuwagadhi road have been ongoing for the last few years, but no concrete progress has been made so far. This was one of the five projects proposed by Nepal to the China-led Asian Infrastructure Investment Bank (AIIB) for financing in June 2016 when the bank held its first annual meeting. But the bank chose to assist in other projects.

The government had also tried to bring in private sector investment for the project. The Investment Board Nepal had placed it on the list of projects to be developed under the public-private partnership (PPP) model.

“But since China has committed to developing the project, it is unlikely to be built under a PPP model,” said Thapa.