National Pride Projects (NPPs), once heralded as transformative drivers of economic growth and infrastructure development, have instead become symbols of systemic inefficiencies, bureaucratic hurdles and unmet promises. Envisioned as cornerstones of the nation’s progress, these projects have faced persistent setbacks, cost overruns and lacklustre implementation, casting doubt on Nepal’s capacity to execute large-scale infrastructure initiatives.

The concept of NPPs was introduced in FY 2011/12 under then-Prime Minister Dr Baburam Bhattarai with the goal of expediting Nepal’s development, stimulating economic growth, creating employment opportunities and promoting social equity. Thirteen years on, the initiative has largely failed to deliver on these ambitious promises.

Launched with 17 existing large-scale projects under the NPP designation, the initiative expanded over the years, adding four projects 2013/14 and one each in 2018/19, 2019/20 and 2020/21, bringing the total to 24 projects. However, progress has been slow, with only three projects completed over 13 years, highlighting significant delays in achieving the program’s objectives.

According to the 61st Annual Report of the Office of the Auditor General (OAG), of the 24 implemented projects, only three are completed, three have achieved over 80% physical progress, five are between 50-80% physical progress and nine remain below 50%. The status of four projects has not been specified. Delays have caused initial costs to escalate sharply, placing further strain on Nepal’s limited financial resources.

The sluggish progress of NPPs highlights deep-rooted systemic issues, including inefficient budgeting, bureaucratic red tape and slow decision-making. These delays not only squander time and resources but also undermine the long-term economic and social benefits these projects were intended to deliver.

According to former Secretary Kishore Thapa, stakeholders involved in NPPs often fail to recognise the strategic importance of these projects. “The implementation of these projects is no different from regular development initiatives, with no fast-track mechanisms or local facilitation in place,” Thapa said, during an interaction organised by the Institute of Government and Public Affairs about a month ago.

A study titled 'Examining the Public Procurement Process of Pride Projects in Nepal' sheds light on the myriad challenges hindering NPPs, from land acquisition problems to budget constraints, all of which have severely disrupted progress on these critical infrastructure initiatives.

One of the most significant obstacles is land acquisition and compensation disputes. Delays in acquiring land and disagreements over compensation have caused major disruptions, stalling projects and preventing them from adhering to their timelines.

The study also identifies persistent budget constraints as a critical issue. Many NPPs have struggled to secure sufficient funding, with delays in payments and disbursements further compounding the problem. These financial challenges have left several projects underfunded, resulting in delays and incomplete work.

Variation orders and cost escalations are another recurring challenge. About half of these projects have experienced changes in project scope, leading to increased costs. These issues point to deficiencies in initial planning and budgeting, which failed to anticipate complexities and evolving demands of the projects. Contractual disputes and regulatory challenges have added further complications, introducing legal uncertainties that delay progress and disrupt project management.

The study also highlights a lack of coordination and oversight. Poor inter-ministerial coordination has hindered progress, while inadequate oversight has allowed for inefficiencies and delays to go unchecked. This fragmented approach among government bodies has further stymied efforts to effectively manage and execute these vital projects.

Cost Overrun and Budget Constraints

In the transportation and infrastructure sector, which includes highways, airports and railways, six major highway projects have been designated as pride projects. Despite their strategic importance, most of these projects have faced severe funding shortages and delays, compounded by land acquisition bottlenecks that have caused significant setbacks.

A glaring example is the Kathmandu-Tarai/Madhesh Expressway. Initially estimated at Rs 111 billion, its cost was revised to Rs 175 billion and later increased to Rs 211.93 billion. Of this total, Rs 60.44 billion has already been spent. The 70.977-kilometre road has ongoing work on 64.477 kilometres under contract management. However, financial progress stands at just 29% of the total budget, while physical progress is at 35%.

Govinda Raj Pokharel, former Vice Chairperson of the National Planning Commission (NPC), highlights cost overruns and budget constraints as significant impediments for infrastructure projects. "Some projects receive funding but fail to utilise it effectively, while others struggle to secure any budget at all. For instance, a project requiring Rs 20 billion may receive only Rs 200 million in government allocation. Many such cases exist where financial limitations have hindered progress. Land acquisition issues have also emerged as a result of these constraints,” Pokharel said. “It is high time we considered scaling down the scope of NPPs to ensure more efficient and effective use of the available resources."

The Kaligandaki Corridor project exemplifies the financial challenges. Construction has stalled due to insufficient funds, with an additional Rs 250 million needed to settle payments for completed work in some sections. Delayed payments to contractors have further exacerbated the issue, leaving workers unpaid and halting construction activities. These ongoing problems highlight the impact of cost overruns and budget constraints of NPPs.

Budget allocations for NPPs are frequently depleted by settling old liabilities, leaving minimal funds for new work. A stark example is the Postal Highway, which has been under construction for 15 years with just 67.56% progress. Its completion remains uncertain due to funding as the Mid-Hill Highway, and Koshi, Kaligandaki and Karnali corridor road projects. Officials report that payments remain pending for several works completed in the previous fiscal year. As a result, current allocations are often redirected to settle old liabilities. For instance, the Ministry of Physical Infrastructure and Transport was allocated Rs 150 billion this year, significantly below the Rs 200 billion needed to address ongoing obligations and fund new project requirements. This financial strain has led to reluctance among contractors to move forward with projects due to delayed payments.

The Madan Bhandari Highway, intended to connect Bahundangi in Jhapa to Rupal in Dadeldhura by 2024/25, has achieved only 50% progress and now faces a revised completion target of 2027/28. Despite requesting Rs 5.6 billion for this fiscal year, the project was allocated just Rs 3.53 billion.

Former secretary Thapa says Nepal lacks the capacity to fund all NPPs. "If we continue at this pace, it will take decades, or even a century, to complete them. While infrastructure development is essential, we must acknowledge that Nepal lacks the necessary resources. Scaling down the scope of these projects is essential at this point," he added.

Another striking example is the Nijgadh International Airport, conceived to meet Nepal’s growing aviation needs and ease congestion at existing international airports. However, budget allocation for the project has remained insufficient, with only Rs 250 million earmarked for the current fiscal year—barely enough to cover preliminary tasks such as land compensation and fencing of the project area. The project has seen minimal physical progress, hindered by unresolved environmental and legal issues, including the Environmental Impact Assessment and the relocation of the Tangiya settlement.

Bureaucratic Tangles

In December 2023, the then Chief of Army Staff, Prabhuram Sharma, raised concerns before the State Affairs and Good Governance Committee of the House of Representatives about forest-related laws impeding the construction of the Kathmandu-Tarai/Madhesh Expressway. “I took the prime minister and the defense minister on an observation tour of the project site in April when four trees needed to be felled for the right of way,” said Sharma. “Nine months later, we have yet to receive approval to cut down those four trees.”

Sharma criticised the inefficiency, pointing out the irony that a project named the "Fast Track” was being slowed by bureaucratic hurdles. He added that non-cooperation from offices under the Ministry of Forest and Environment had become a recurring issue for agencies managing major infrastructure projects.

Former and current government officials from infrastructure-related ministries have pointed out that NPPs are treated no differently than regular development initiatives. The same legal and regulatory frameworks apply to both, making the implementation of NPPs particularly challenging despite their designation as the government’s flagship initiatives.

This lack of coordination has adversely affected 12 NPPs, including six transportation and infrastructure projects and four water resources projects. For example, delays in securing permissions for explosives from the Ministry of Defense and coordinating with the Nepal Electricity Authority (NEA) for relocation of power lines have hampered progress on the Koshi Corridor and Karnali Corridor projects. Cumbersome bureaucratic processes, requiring multiple letters and approvals, have not only delayed project timelines but also frustrated project officials. In some cases, local government officials have worsened the situation by inciting opposition among residents instead of facilitating project implementation. These challenges highlight the urgent need for streamlined coordination and efficient decision-making to ensure timely completion of these critical initiatives.

The Babai Irrigation Project exemplifies the difficulties arising from a lack of inter-ministerial coordination and stakeholder engagement. Collaboration between the Irrigation Department, the Ministry of Energy, Water Resources and Irrigation, and local stakeholders is critical to its success. However, disputes over water resource distribution among federal, provincial and local governments have surfaced under Nepal's federal system. Since the project spans two provinces, conflicts over coordination and equitable distribution of benefits must be carefully managed to avoid further delays.

According to Thapa, land acquisition has been a persistent obstacle for fast-track construction and remains a critical challenge. He emphasised that addressing such issues requires an integrated approach involving multiple ministries. However, despite frequent changes in government, no administration has shown serious commitment to tackling these challenges.

Thapa also stressed that while Nepal urgently needs new airports to ease congestion in Kathmandu, the greater challenge lies in ensuring their operationalisation. With the completion of two new international airports in Bhairahawa and Pokhara, the next critical step is engaging diplomatically with India and other neighbouring countries to attract international flights. “The responsibility now lies with the Prime Minister and relevant ministries to hold regular discussions and prioritise the operationalisation of these airports. Unfortunately, this issue has yet to receive the necessary attention on the government’s agenda,” said Thapa.

Politically Motivated Projects

The Project Classification Basis and Criteria, 2023, outlines the framework for selecting NPPs, establishing parameters such as a minimum cost estimate of Rs 50 billion, alignment with national priorities, coordination with long-term development strategies, and a focus on fostering economic growth. Projects must also hold strategic importance in areas like national security, social integration and structural transformation, with a positive impact on social development and human well-being.

In practice, however, the selection of NPPs appears to be influenced more by political considerations than by adherence to these criteria. Many projects are launched without thorough studies or adequate local consultations, resulting in significant delays due to social disputes or challenges in land acquisition.

“Selection of national pride projects should be guided by strategic plans and visions, not political interests,” a former government official said, highlighting the urgent need to depoliticise decision-making to ensure the success of such initiatives.

The Pokhara International Airport exemplifies the pitfalls of politically driven projects, which frequently lack proper planning, oversight and transparency. Despite significant investment, the airport’s future remains uncertain, plagued by poor operational management and limited engagement with international airlines. Experts argue that such experiences should serve as lessons, guiding future projects to better align with Nepal’s sustainable development goals.

Former secretary Thapa warns that politically motivated projects divert valuable resources and focus away from meaningful development. He emphasises the necessity of prioritising projects that are cost-effective, environmentally sustainable and inclusive. “Nepal’s capital expenditure budget is approximately Rs 300 billion, which must cover all development initiatives, including national pride projects. The pressing question is whether Nepal can afford politically motivated projects within this limited budget,” Thapa stated.

He further observed that prime ministers and ministers often push for mega projects in their constituencies thereby diluting the focus of national pride initiatives. “If the government is serious about completing its national pride projects, it must eliminate politically motivated additions to the list,” he added, advocating for a more strategic, depoliticised approach to development planning.

Infrastructure expert Surya Raj Acharya voiced similar concerns, emphasising the detrimental impact of politically driven appointments in project management. “Such appointments often prioritise political interests over the project’s objectives, with many appointees treating their roles as personal employment opportunities rather than as responsibilities to ensure project completion,” Acharya stated. He added that addressing these issues is crucial to managing budget constraints and ensuring the timely and effective completion of national pride projects.

Call for Dedicated Law to Govern NPPs

Stakeholders have long advocated for a dedicated law to govern national pride projects, citing their slow implementation as a major concern. The demand for a legal framework to monitor and evaluate these projects gained momentum following years of significant delays. In 2019, the KP Sharma Oli-led government introduced a bill in the National Assembly aimed at improving the performance of development projects through effective monitoring and evaluation. However, the bill stalled for years without any discussion.

On August 30, the Legislative Management Committee under the National Assembly finally began deliberations on the bill, seeking to establish a legal framework for evaluating and monitoring development projects across all levels of government. Yet, no further progress has been taken since these initial discussions.

Parliamentary committees in both the House of Representatives and the National Assembly have repeatedly stressed the need for dedicated legislation to accelerate the execution of national pride projects. In 2017, the Parliamentary Committee on Development directed the NPC to draft and submit a law within a month to facilitate the implementation of strategically important projects.

Similarly, in 2022, the National Interest Coordination Committee of the upper house urged the NPC to create clear criteria for selecting these projects, highlighting the absence of such guidelines as a major obstacle to their implementation.

Officials involved with national pride projects have identified restrictive laws as a major barrier to infrastructure development, calling for urgent revisions to legislation governing forests, environmental standards, land acquisition and public procurement.

One significant challenge arises from forest laws that require infrastructure developers, such as those building hydropower plants, to compensate for forestland use by providing an equivalent area of land to the government. A government official questioned the rationale behind this requirement, stating, “Under the public-private partnership law, the entire hydropower project, including the land it occupies, is transferred to government ownership after 30 years. Why, then, should developers be required to purchase equivalent land for the forest authority?”

 

Policy experts and stakeholders have also called for a "sunset law" tailored to national pride projects. According to Acharya, existing challenges, including land acquisition issues, frequent employee transfers and inadequate oversight, cannot be resolved under current legal frameworks. “A dedicated law is essential to remove the hurdles that impede project completion,” he added.

Thapa agreed with this sentiment, emphasising the need to prioritise key projects among national pride projects and enact a specialised law to ensure their timely completion. “First, we must identify priority projects, and then legislate a separate law to guarantee their effective execution,” Thapa suggested.

The government has previously committed to introducing sunset laws specifically designed for national pride projects. These laws, intended to be valid for a limited period, aim to expedite project implementation. However, despite multiple changes in administration, no substantial progress has been made. The continued absence of legislative action remains a major impediment to the effective execution of these strategically vital initiatives.

The Problem of Underbidding

One of the major challenges in Nepal’s public procurement system is underbidding. Contractors frequently submit abnormally low bids to secure contracts, resulting in substandard work or incomplete projects. Projects such as Postal Highway, Mid-Hill Highway and Sikta Irrigation Project have all suffered due to underbidding. Contractors secured these contracts with the lowest bids but failed to complete the work on time or delivered subpar outcomes.

The procurement law’s emphasis on awarding the "lowest evaluated substantially responsive bid" has made public entities hesitant to reject low bids, fearing investigations by anti-corruption bodies. Contractors often exploit this loophole, undermining competition and the quality of public works.

According to Sheran Singh Lama, a researcher at the Institute for Government and Public Affairs (IGPA), contractors manipulate the bidding process to exploit gaps in the procurement regulations. Rigid rules and loopholes allow bidders to secure projects at their desired prices, stifling competition and leading to poor-quality outcomes. This weakens the delivery of public goods, erodes overall development and diminishes public trust in the procurement system.

Procedural rigidities and lengthy bidding processes also contribute to delays in approvals, obstructing timely execution of projects. The focus on cost efficiency through low bid limits the adoption of innovative approaches such as public-private partnerships and design-build contracts which could enhance project delivery.

Furthermore, current procurement laws ack the flexibility to address the unique technical complexities and strategic importance of national pride projects. The Public Procurement Regulations has undergone 13 amendments since its introduction. These frequent amendments have drawn public scrutiny. During KP Sharma Oli’s tenure as Prime Minister in 2019, five amendments were introduced within just 18 months. A recurring theme in these amendments has been deadline extensions, particularly under Rule 120 of the Public Procurement Regulations. For instance, the Seventh and Eighth Amendments allowed pending contracts to be extended by one year, while the 13th Amendment permitted contractors to extend project deadlines, often citing incomplete government payments as the cause.

Although these provisions aim to address legitimate delays caused by unforeseen circumstances, they have also been misused. Contractors often exploit these rules to justify extensions thereby slowing progress and compromising project quality. Contractors frequently cite unpaid work as the reason for delays, leaving many projects incomplete and stalled.

Fear of Being Prosecuted

Fear of prosecution is a significant factor delaying projects in Nepal, experts say. Even well-intentioned officers often hesitate to make decisions due to concerns about unnecessary complications from oversight agencies.

“Project officers frequently face undue burdens and interference from oversight agencies when making decisions. As a result, effective decisions are often not made,” said Acharya.

Former NPC Vice Chairperson Pokharel agreed with Acharya, emphasising that while individuals with vested interests should face prosecution, genuine decision-makers also encounter unwarranted obstacles. He added that this has been a persistent issue, particularly for national pride projects.

Pokharel highlighted the NPC’s potential role in addressing these challenges. “NPC, chaired by the Prime Minister, is a powerful body for decision-making without fear. Unfortunately, this potential hasn’t been fully realised,” he said, adding that politically appointed vice-chairpersons complicate matters. “The NPC should honestly report the realities of projects, their challenges and possible solutions to the Prime Minister and other relevant bodies to ensure swift problem-solving.”

Acharya also criticised the ineffectiveness of directives from the Prime Minister’s Office in resolving monitoring issues. “It is essential to address the root causes, such as why project officers fear taking action,” he added.

To tackle these challenges, Acharya suggested appointing dedicated project managers and granting them full authority to execute projects. “They should be provided with attractive compensation and held accountable for the project’s success,” he said. “The government should avoid transferring them until the project reaches a significant milestone. This approach will ensure efficient project completion.”

(This report was originally published in  January 2025 issue  of New Business Age Magazine.)