The government has approved tax exemptions on construction materials and imported equipment needed for the second phase of Kathmandu’s Ring Road expansion, removing a key hurdle that had stalled the project for years.
The Cabinet decision allows the Chinese side, which is supporting the project under a grant arrangement, to move ahead without paying customs duties and other taxes on materials and machinery. Officials say the Department of Roads will now begin the formal process for signing the implementation agreement with China. Preparations are expected to be completed by mid-March, with the agreement likely to be signed soon after.
Once the agreement is in place, a Chinese technical team will submit the project design for Nepal’s approval. After clearance of the design and bidding documents, the Chinese side will appoint a contractor and consultant. Construction could begin within the current fiscal year if procedures move smoothly.
Talks to expand the second section began seven years ago, but progress was delayed largely due to policy decisions, including the pending tax waiver. A Chinese technical team completed a detailed survey last year covering 8.2 kilometres. However, the expansion will extend only up to Basundhara Chowk.
The project includes a concrete bridge at Dhungedhara, three disability-friendly overhead bridges and streetlights from Kalanki to Basundhara.
Meanwhile, Nepal has independently pushed forward work on the third section. A 700-metre stretch from Narayangopal Chowk to Chappal Karkhana is 65 percent complete after missing its initial deadline.
Officials say the tax waiver brings long-awaited momentum to one of the capital’s most important infrastructure upgrades.