The construction of Nagdhunga-Naubise Tunnel Road Project could move ahead soon as Nepal and Japanese authorities are holding negotiations this week for securing a loan for the project.

The two sides have reached understanding to sign an agreement for the Japanese loan within December, according to officials from the government of Nepal and the Japan International Cooperation Agency (Jica).

“Negotiation for Japanese assistance is scheduled to take place on Wednesday,” said Baikuntha Aryal, chief of International Economic Cooperation Coordination Division at the Finance Ministry. He is also heading the government’s negotiating team. A Jica official also confirmed that a Japanese team is arriving in Kathmandu this week for negotiations. The two governments are expected to endorse the deal after the negotiations, paving the way for a loan deal.

“Signing of the loan agreement is planned for December,” said the Jica official, adding that the signing would take place no later than January next year.

Considering Japan’s long experience and a proven track record in tunnel technology, Nepal had approached Japan for the country’s first ever tunnel road project.

The 2.5km tunnel planned to be dug under the western rim of Kathmandu Valley will dramatically cut the travel time over the mountainous route—currently the main gateway to the Capital.

Japanese State Minister for Foreign Affairs Nobuo Kishi, during his visit here in August for the celebrations of 60 years of Nepal-Japan diplomatic ties, had pledged the Japanese assistance for the project.

Japan is expected to provide Rs18 billion for the construction of the project. During the visit, Kishi had informed Prime Minister Puspa Kamal Dahal that the efforts were underway to disburse the loan amount, according to Dahal’s personal website.

There is not much loan component in Japanese assistance to Nepal over the long history of Japanese cooperation. Melamchi Drinking Water Project, Tanahu Hydropower Project, post-earthquake reconstruction of rural housing and planned aid for tunnel roads are the few projects where Japan has extended loans.

According to the Department of Roads, it will be the first loan from Japan in Nepal’s road sector although the country has received grants in the sector from Japan.

As far as project preparedness is concerned, a feasibility study, environment impact assessment and road alignment have already been completed, according to the DoR. Department officials said that they are now engaged in selecting a consultant to conduct a detailed project

report (DPR). “Once the loan agreement is concluded, consultant will be appointed for the project,” said Dhan Bahadur Tamang, secretary at the Ministry of Physical Infrastructure.