A scathing report exposes systemic delays, bureaucratic red tape, and chronic underfunding that are crippling Nepal’s most critical infrastructure developments, warning that some mega-projects could take centuries to finish at current funding levels.
Nepal’s ambitious push to modernize its infrastructure has hit a formidable roadblock. According to a grim new assessment by the World Bank, the completion of the country’s 17 ongoing “national pride projects” could take an astonishing 41 more years if the current sluggish pace of funding and execution continues.
The alarming forecast is detailed in a recently released World Bank report titled Nepal Capital Expenditure Bottlenecks Analysis. The comprehensive document sheds light on a deeply flawed public investment management system, exposing the systemic delays that continue to slow infrastructure delivery and throttle economic progress in the Himalayan nation. While Nepal appears to have a sound investment management framework on paper, the reality on the ground is marred by poor project preparation, chronic underfunding, and severe bureaucratic bottlenecks.
At the heart of the crisis is a noticeable deterioration in Nepal’s public capital stock – the total value of physical assets owned by the government that support the broader economy and essential public services. The federal capital budget has steadily declined in recent years, dropping from a 27.1 per cent share of the total budget in 2020-21 to just 20.9 per cent in 2023-24. Even more concerning is the execution rate, as only around 62 per cent of these already diminished allocations are successfully spent on average.
A System Plagued by Red Tape and Delays
According to the World Bank, the root of the problem lies in the earliest stages of the project cycle. Project preparation is heavily stalled by crippling bureaucratic hurdles, primarily concerning environmental clearances and land acquisition. For typical infrastructure projects, tree-cutting approval processes alone take an average of two years to navigate, the report says. These agonizingly slow timelines are driven by multiple, overlapping approval procedures, redundant and duplicate surveys, and a surprisingly limited use of modern digital tools.
Land acquisition presents an even steeper hurdle. The report notes that acquiring the necessary land for infrastructure projects takes an average of 35 months. This is nearly 150 per cent longer than originally planned, leaving critical development initiatives stranded before the first shovel ever hits the ground. These pre-construction delays cascade throughout the project cycle, driving up costs and delaying the economic benefits that the infrastructure is supposed to unlock.
Spreading Resources Too Thin
Beyond red tape, the multilateral funding agency highlights a critical strategic failure: the tendency of the Nepali government to approve far too many poorly prepared projects at once. By launching a multitude of mega-projects simultaneously, the government invariably spreads its limited financial resources far too thin, ensuring that no single project receives the capital it needs to reach the finish line on schedule.
Infrastructure experts and stakeholders argue that concentrating resources is the only viable path forward. “This is an actual national pride project, because it not only saves time and fuel – fuel worth Rs 18 billion annually – but also lives,” noted an industry expert who did not want to be identified, emphasizing the potential impact of focused investment. “The project can be completed within the next three years if resources are concentrated. The government should stop most projects and focus on a few to get results.”
Mega-Projects in Limbo
The real-world consequences of this scattered approach are vividly illustrated by the current state of Nepal’s most highly touted transport corridors. The Pushpalal (Mid-hill) Highway, which is slated to be Nepal’s longest national highway, has seen painfully slow progress. The 1,879-kilometer road project, designed to connect 24 districts and 225 villages, has achieved only 77 per cent physical progress despite a decade and a half of continuous construction.
Similarly, the progress on the Postal Highway, a crucial artery running across the country’s southern belt, remains highly unsatisfactory. After 16 years of work, 75 per cent of the 1,792-kilometer road has been completed.
The outlook for future projects is even more daunting. The expert quoted above warned that under the current funding scenario, the proposed East-West railway project – an undertaking estimated at a staggering Rs 1,500 billion – could take an unbelievable 500 years to build. “The government should complete critical projects selectively, and then build other projects from the revenue they generate,” Thapa advised, advocating for a phased, revenue-driven development model.
A Roadmap for Urgent Reforms
To prevent national pride projects from turning into multi-generational burdens, the World Bank has outlined a series of urgent structural and policy reforms. First and foremost, the report calls for a streamlined approach to land acquisition and environmental clearances, noting that such reforms would allow projects to break ground much sooner and significantly reduce idle capital allocations.
Financial management also requires a massive overhaul. The World Bank suggests implementing more credible cash forecasts and fiercely protecting capital budgets from mid-year cuts. Furthermore, fund releases must be closely aligned with realistic work plans rather than arbitrary timelines.
Finally, the report stresses the need for drastic improvements in the public procurement system. Recommendations include establishing clearer bid evaluation criteria, strictly screening abnormally low bids that often lead to abandoned contracts, and enhancing the government’s e-procurement system. By ensuring balanced risk-sharing and building stronger procurement capacity, Nepal could accelerate contract awards, reduce costly legal disputes, and finally ensure the reliable, timely delivery of the infrastructure its citizens desperately need.
