Japanese State Minister for Foreign Affairs Nobuo Kishi on Wednesday informed Prime Minister Pushpa Kamal Dahal about steps that have been taken to finance the Nagdhunga-Naubise Tunnel Road Project, according to PM Dahal’s personal website.

Kishi said that works have started to issue Rs18 billion loan following PM Dahal’s request for Japanese aid to build the 2.5-km tunnel on a key highway serving Kathmandu.

The tunnel road planned to be dug under the western rim of Kathmandu Valley will eliminate the need to travel over the tortuous mountain route which is now the main access to the Capital.

Japanese State Minister Kishi is currently visiting Nepal to participate in celebrations marking the 60th anniversary of the establishment of diplomatic relations between the two countries.  

The Japan International Cooperation Agency (Jica) has conducted a feasibility study of the proposed project and identified it as being feasible, said a Jica official.

Japan had agreed in principle to fund the construction project if found feasible.

According to officials at the Ministry of Physical Infrastructure and Transport, the Japanese minister is expected to announce soft loan assistance for the project during this visit. “Japan is expected to announce the assistance either on September 1 or 2 on the occasion of the 60th anniversary of the establishment of diplomatic relations as per our consultations with Japanese officials,” a senior ministry official said.  

According to the Department of Roads, a feasibility study, environment impact assessment and road alignment have already been completed.

“We are currently engaged in selecting a consultant to conduct a detailed project report (DPR),” said Sanjaya Shrestha, deputy director general of the Foreign Cooperation Branch at the department. “We are waiting for a formal announcement from the Japanese side before we select the consultant.” According to him, the consultant will be selected within two months after Japan formally announces the assistance.

Japan is expected to provide a loan at 0.01 percent interest for the project, said Shrestha. “It will be the first loan from the Japan government for the road sector,” he added. As per the understanding reached between the two sides, the repayment period will be 30 years including a grace period of 10 years.

A Japanese embassy official, when asked about the possible announcement of the assistance, said that they would have something to say after the Japanese government makes a declaration.

A Jica official told the Post that the Nepal government had made a formal request to the Japanese government for aid. “Once the Japan government announces the approval of the assistance for the project, Jica will be told to move ahead with the project,” he said.

Meanwhile, the Finance Ministry has begun preparations to conduct loan negotiations as Japan has agreed in principle to fund the project.

Baikuntha Aryal, chief of the international economic cooperation coordination division at the Finance Ministry, said that an appraisal had been

prepared to enter into loan negotiations.