The government has decided to waive taxes on construction materials and imported goods required for the second section of the Ring Road expansion, paving the way for the project to move forward.

Urban Development Minister Kumar Ingnam said the Cabinet meeting on Tuesday decided to grant tax exemptions for materials to be used during the expansion.

With the Cabinet decision in place, the Department of Roads will proceed with the formal process, Deputy Director General Arjun Prasad Aryal said.

“Once we receive official word on the Cabinet decision, we will ask the Chinese side for a date to sign the implementation agreement,” Aryal said. “We will notify them through the Chinese Embassy and confirm which officials will sign before proceeding.”

“He said preparations would be completed by March 14, and the agreement is expected to be signed in Chaitra (mid-March to mid-April), citing the approaching election schedule.”

“After the signing, the Chinese technical team will submit the design for our approval. We will review it and provide feedback,” Aryal said. “They will then send the bid documents, and once we approve them, the Chinese side will select the construction company and consultant.”

He said the Chinese side will appoint the selected contractor and consultant.

“Once the construction company arrives, we will handover the site,” he said. “If all goes smoothly, the company will be mobilised within the current fiscal year.”

Seven years have passed since discussions on expanding the Ring Road’s second section began, yet work has not started. The delay was mainly due to Nepal’s slow policy decisions, with the Chinese side insisting that procedures proceed only after tax exemptions were approved.

With the Cabinet’s approval, the Chinese construction company will be exempt from customs duties and all other taxes on imported equipment and materials for the project.

A Chinese technical team arrived in Nepal on April 19 last year to survey the second section, completing the work over about 2.5 months. Although the survey covered 8.2 kilometres, the Department of Roads said the expansion will reach only near Basundhara Chowk, not up to the Basundhara culvert.

The design includes a concrete bridge at Dhungedhara and three disability-friendly overhead bridges—between Sitapaila and Balaju, Balaju and Machhapokhari, and Samakhusi and the Basundhara police post. Streetlights from Kalanki to Basundhara Chowk will also be installed as part of the expansion.

Representatives of Nepal and China signed a cooperation letter on August 22 last year.

Currently, the Syabrubesi–Rasuwagadhi road upgrade and the second section of the Ring Road are set to be implemented under Chinese grants. The government had already decided to grant tax exemptions for the Syabrubesi–Rasuwagadhi section.

The Department of Roads said that since grant assistance is exempt from taxes under Nepal’s foreign aid policy, the Cabinet approved tax exemptions for both projects. The Ministry of Physical Infrastructure noted that the Koteshwar–Kalanki section was built under similar arrangements.

Following initial delays from the Chinese side on the second section, the government has advanced the third section independently. Blacktopping has been completed on one side of the 700-metre stretch from Narayangopal Chowk to Chappal Karkhana, with work continuing on the other side.

As per the contract agreement signed on February 18, 2025, the work was to be completed by mid-July. After missing the deadline, the extension runs until February 25, with overall progress at 65 percent. However, completion within the extended period appears unlikely.

Saying that most structural works have been completed and only blacktopping remains, Road Division Kathmandu Chief Subodh Kumar Devkota said the remaining work would not take much time. The 700-metre contract was awarded to Ambuja/SK/Kali JV at Rs240 million, including VAT.

The Road Division Office, Kathmandu, said it has sought source approval of Rs510 million from the National Planning Commission to expand the road from Chappal Karkhana to Gopikrishna Bridge, covering around 1,200 metres.