The upgrade of the 40-km Dhankhola–Lamahi road section along the East–West Highway has officially begun under the Millennium Challenge Corporation (MCC) Nepal Compact.

Lumbini Province Chief Minister Chet Narayan Acharya laid the foundation stone on Wednesday, formally launching the road rehabilitation work. The project is being implemented through MCA-Nepal.

The upgrade will introduce advanced construction technologies, including Full Depth Reclamation (FDR) and Superpave asphalt. Officials said the methods will recycle existing road materials, improve durability and reduce long-term maintenance costs.

Under the plan, the carriageway will be widened to seven metres on each side, with 2.5-metre shoulders on both sides, creating a total width of 12 metres.

Speaking at the ceremony, Chief Minister Acharya said the use of modern technology is a positive step towards improving infrastructure quality. He said the upgraded road will make travel safer and more reliable while supporting local businesses, agriculture and entrepreneurship. He also stressed the need for timely and quality completion of the project.

Nepal’s development partnership with the US was highlighted during the event. In a social media post, the US Embassy in Nepal said the project marks renewed progress under one of the country’s most significant infrastructure initiatives.

US Chargé d’Affaires a.i. Scott Urbom said, “This project represents much more than a single investment. It reflects the strength of our bilateral relationship and our shared commitment to delivering tangible results for the people of Nepal and American businesses working here through the Compact.”

The Embassy noted that the broader MCC Nepal Compact represents a $747 million joint investment, including $550 million from MCC and $197 million from the Government of Nepal. It said the programme aims to reduce transport costs, improve road safety, strengthen electricity reliability and expand cross-border power trade.

Sushil Babu Dhakal, joint secretary at the Ministry of Physical Infrastructure and Transport, said MCA-Nepal’s investment complements government plans and will help expand economic opportunities through improved connectivity.

Representatives from Sharma Construction and Kumar Nirman Sewa Pvt Ltd, operating under the joint venture Sharma–Kumar JV, said the project would be completed within the stipulated timeframe.

The contract was awarded after a tender issued on October 30, 2024. MCA-Nepal signed the agreement with the construction joint venture on December 22, 2025. The project is scheduled for completion within 24 months, with construction costs set at $208 million excluding VAT, equivalent to around Rs 3 billion.

Officials said FDR technology will enable recycling of existing road materials such as sand and gravel, reducing environmental impact while improving cost efficiency. The Superpave asphalt system is expected to enhance road strength and performance under heavy traffic conditions.

The Dhankhola–Lamahi upgrade is one of the key projects under the MCC Nepal Compact, which authorities say will strengthen Nepal’s transport infrastructure and support long-term economic growth.