The Nagdhunga–Naubise–Mugling (NNM) road is one of Nepal’s most vital transport corridors, connecting the Kathmandu Valley to the Terai and onward to India.
As part of Asian Highway AH42, it carries an estimated 60-70 percent of all goods entering Kathmandu, including food, fuel, construction materials, and medicines.
Recent upgrades under the Strategic Road Connectivity and Trade Improvement Project (SRCTIP) have improved pavement quality, road safety, and travel times along the 94.7 km stretch.
However, progress came at a cost: land acquisition alone took 35 months—nearly 150% longer than planned—highlighting the systemic delays that continue to slow infrastructure delivery in Nepal.
Land acquisition alone for NNM road took 35 months—nearly 150% longer than planned—highlighting the systemic delays that continue to slow infrastructure delivery in Nepal.
This project reflects a broader challenge facing major investments in Nepal.
According to the World Bank’s Nepal Capital Expenditure Bottlenecks Analysis (October 2025), this gap between planning and delivery is structural—and persistent.
At the federal level, the share of the capital budget in the total budget declined from 27.1 percent in FY21 to 20.9 percent in FY24, with only around 62 percent of these allocations executed on average. As a result, federal capital expenditure as a share of GDP fell from 5.3 percent to 3.4 percent.
Combined with underspending at the subnational level, total capital expenditure (CAPEX) across all three tiers of government fell from 11.4 percent of GDP in FY21 to 7.8 percent in FY24, well below the 10-15 percent of GDP estimated as necessary to close the country’s infrastructure gap.
Total capital expenditure (CAPEX) across all three tiers of government fell from 11.4 percent of GDP in FY21 to 7.8 percent in FY24.
These trends carry real economic consequences: delayed infrastructure projects raise investment costs, slow service delivery, constrain economic growth, and limit job creation.
Why does public investment fail at the implementation stage?
On paper, Nepal seems to have a sound public investment management system. In practice, weaknesses appear throughout the project cycle—from selection to funding and contract management.
Start with budgeting. Nepal approves far too many poorly prepared projects. This spreads resources thin—at current funding levels, completing 17 National Pride Projects would take 41 years as per World Bank estimates. Outdated costing data and weak monitoring also undermine strategic planning and the medium-term expenditure framework.
At current funding levels, completing 17 National Pride Projects would take 41 years as per World Bank estimates.
Project preparation is slowed mainly by delays in tree cutting clearance and land acquisition. For infrastructure projects, tree cutting approval processes take 2 years on average due to multiple approval procedures, duplicate surveys and limited use of digital tools. Land acquisition takes 2-3 years on average because of outdated valuation methods, fragmented records, and frequent compensation disputes.
For infrastructure projects, tree cutting approval processes take 2 years and land acquisition takes 2-3 years on average.
read more: https://www.worldbank.org/en/news/feature/2026/03/13/why-nepal-struggles-to-build-infrastructure-and-what-can-be-done-about-it
