A sharp rise in bitumen and petroleum prices triggered by the conflict in West Asia has disrupted road construction across Nepal, forcing contractors to halt blacktopping works and delaying several major highway projects.

Contractors say bitumen has become increasingly difficult to obtain, even at higher prices, affecting projects, including the Araniko Highway and Mid-Hill Highway to the Kathmandu-Tarai Expressway and Postal Highway.

Among the worst affected is the expansion of the 15.8-kilometre Sunyabinayak–Dhulikhel section of the Araniko Highway, one of Nepal’s busiest road corridors. The project had aimed to complete the first layer of blacktopping across the entire stretch during the current fiscal year.

The highway is being upgraded in two sections: Sunyabinayak–Sanga and Sanga–Dhulikhel.

The 7.5-kilometre Sunyabinayak–Sanga section was awarded to Ashish-Kumar Shrestha-Bandhan Bhagwati JV in January 2023 for Rs3.89 billion. Construction has reached around 50 percent completion, but only 1.5 kilometres have been blacktopped. The contract runs until March 2027.

Further blacktopping has effectively stopped because of the bitumen shortage.

“Blacktopping is continuing towards Dhulikhel, where contractors have managed to procure bitumen at higher prices, but work on the Sunyabinayak–Sanga section has not been possible,” said Bijay Kumar Mahato, chief of the Sunyabinayak–Dhulikhel Road Project.

“Had bitumen and fuel prices not risen, the first of the two blacktopping layers would have been completed by now.”

On the adjoining 8.3-kilometre Sanga–Dhulikhel section, around 5.5 kilometres of the first blacktopping layer have been completed. The section is roughly 70 percent complete.

Awarded to Lama Construction in December 2022 for Rs4.06 billion, the project is scheduled for completion by December 2026.

Overall progress on the entire Sunyabinayak–Dhulikhel project stands at 56 percent. A one-kilometre underpass near Sanga is about 90 percent complete, according to project officials.

The impact extends well beyond the Araniko Highway.

Construction has slowed on the Mid-Hill Highway, Postal Highway, Koshi Highway, Kaligandaki Corridor, Karnali Highway and Kathmandu-Tarai Expressway. Blacktopping has also been disrupted on the Madan Bhandari Highway, the Nagdhunga–Mugling road and the Kakarbhitta–Laukahi corridor.

Particularly affected is the Nagdhunga-Mugling road, a critical transport artery carrying more than 12,000 vehicles a day.

The 94.66-kilometre upgrade project, financed through a World Bank concessional loan, has been divided into three sections: Nagdhunga–Naubise, Naubise–Malekhu and Malekhu–Mugling.

On the 12.26-kilometre Nagdhunga–Naubise section, contractors had completed the second layer of blacktopping and were preparing to lay the final blacktopping layer when bitumen prices surged, and supplies tightened. Only six kilometres have so far received the final surface layer.

Keshab Prasad Ojha, chief of the eastern section of the Nagdhunga–Mugling Road Project, said construction slowed after bitumen supplies ran out.

“There is no shortage of locally available construction materials, but contractors have been unable to work effectively because of rising bitumen and fuel prices,” he said.

Preparations are underway to resume blacktopping in the Dharke bazaar area, with contractors expecting to receive around 100 tonnes of bitumen in the coming days.

The Mid-Hill Highway, one of Nepal’s national pride projects, has also been hit.

According to project information officer Sachin Shrestha, shortages and higher prices have delayed works in Ramechhap, Parbat, Dailekh and Gorkha districts.

“The price has increased significantly, and the material is no longer readily available in the market,” he said.

The project had planned to blacktop 75 kilometres of road during the current fiscal year. By mid-May, only 44.25 kilometres had been completed. Overall progress on the highway stands at 83.58 percent.

Of the planned 1,879 kilometres under the project, 1,067.6 kilometres have already been blacktopped, while 114 bridges have been completed.

The Kathmandu-Tarai Expressway has also experienced setbacks.

A project source said the expressway relies on VG-40 bitumen, a higher-grade product not available domestically and requiring import.

“Bitumen shortages are affecting projects across the country,” the source said. “We had planned to blacktop 10 kilometres of road, but only 3.5 kilometres have been completed.”

Officials warned that the shortfall could affect the overall pace of the project, which is scheduled for completion by mid-April 2027.

The Postal Highway, a strategic east-west corridor that has been under construction for 16 years, is facing similar difficulties.

The highway is designed to connect Kechanakawal in Jhapa district with Dodhara Chandani in Kanchanpur and serve nearly 10 million people across 21 Tarai districts. Overall progress has reached 74.35 percent.

Construction began in the 2009-10 fiscal year but has been repeatedly delayed by policy, funding and implementation challenges.

Kuber Nepali, director of the Postal Highway Directorate, said blacktopping work has stalled at several locations.

“Blacktopping has stopped in Madi of Chitwan and in parts of Sunsari and Morang,” he said. “Only limited work is continuing in Dhangadhi and Dang. The entire project has been affected.”

Contractors say repeated government assurances about compensating builders for higher construction costs have yet to translate into concrete action.

Bal Krishna Thapa, vice-president of the Federation of Contractors’ Associations of Nepal, said the industry remains under severe strain.

“After discussions with the Minister for Infrastructure Development, we expected a solution to come quickly, but nothing has happened,” he said. “Contractors are suffering. The government must act urgently and create conditions that allow projects to move forward.”

He also called on the government to reduce the 15 percent customs duty on bitumen to 5 percent.

Gopal Prasad Sigdel, secretary at the Ministry of Infrastructure Development, acknowledged that the surge in bitumen and fuel prices caused by the conflict in West Asia had severely affected the construction sector.

“Mid-February to mid-June is the peak season for road construction and blacktopping,” he said at a discussion in Kathmandu on infrastructure budgeting and price-adjustment challenges. “Many projects have come to a halt. The state must take ownership of this issue and help move projects forward.”

Sigdel said provisions to address price escalation had been included in the budget for the upcoming fiscal year 2026-27.

“The issue of price escalation will be addressed. Contractors should continue their work,” he said. “Even if payments cannot be made immediately, they will be adjusted once a formal decision is taken.”

He said the ministry was working to resolve the problem as quickly as possible.