JICA, Government of Nepal sign additional ¥5.7bn loan for Nagdhunga tunnel

KATHMANDU: Japan International Cooperation Agency (JICA) and the Government of Nepal signed an agreement today for an additional ODA loan of 5.7 billion Japanese yen to support the Nagdhunga Tunnel Construction Project. The funding brings the total loan package to more than 22 billion yen.

The Exchange of Notes for the additional assistance was signed by Finance Secretary Ghanshyam Upadhyaya on behalf of the Government of Nepal and Maeda Toru, Ambassador of Japan to Nepal, JICA said. A separate Loan Agreement was signed by Dhani Ram Sharma, Joint Secretary of the International Economic Relations Division at the Ministry of Finance, for the Government of Nepal, and Matsuzaki Mizuki, Chief Representative of JICA Nepal Office.

The Nagdhunga Tunnel Construction Project aims to improve transport around the Nagdhunga pass and strengthen connectivity between Kathmandu and other key areas. Construction has reached its final phase, with about 99% of physical work completed, and the tunnel is expected to open to the public in July 2026.

At 2.68 kilometres in length, the tunnel is expected to shorten travel times and alter travel patterns in the region while laying the groundwork for future infrastructure initiatives. The project uses modern tunnelling technology and is said to contribute to economic resilience and sustainable development beyond the tunnel itself.

JICA noted the initiative supports Sustainable Development Goal 9 on industry, infrastructure and innovation, and reaffirmed Japan’s ongoing commitment to improving Nepal’s road network. Nepal’s collaboration with Japan through JICA has previously supported major projects, including the 160 km BP Highway–Sindhuli Road, the 9.1 km Kathmandu–Bhaktapur Road, and numerous bridges in Kathmandu Valley and rural areas.

Officials said the Nagdhunga tunnel is expected to become a landmark project in Nepal’s infrastructure history and to complement broader development objectives across the country.