Breaking the Infrastructure Gridlock

It takes a lot to stall a multi-billion-rupee national infrastructure project. In Nepal, sometimes all it takes is four trees. That was the detail that captured national attention in late 2023 when then Nepali Army Chief Prabhuram Sharma appeared before a parliamentary committee to explain delays in the Kathmandu-Tarai Expressway. According to Sharma, a section of the project remained stalled for nine months while authorities waited for approval to cut four trees. Although the project's Environmental Impact Assessment had already been approved, it had remained stuck in the bureaucracy.

The episode became a powerful symbol of a larger problem: Nepal's most important infrastructure projects continue to be slowed by overlapping laws, lengthy approval processes and institutional red tape.

Now, the government is proposing what may be its most ambitious attempt yet to break that cycle. The proposed Development Project Management and Implementation Bill, widely described as a "sunset law", seeks to fast-track nationally significant infrastructure projects by temporarily overriding legal, administrative and procedural hurdles that have long delayed implementation. The law would remain in force for 10 years and apply to a select group of transformative projects in sectors such as hydropower, railways, transmission infrastructure, irrigation, roads, drinking water, sanitation and advanced technology-based infrastructure.

What Is a Sunset Law?

A sunset law is legislation that comes with an expiry date. Unlike other laws, which remain in force until their amendment or repealing, a sunset law automatically lapses after a predetermined period unless it is renewed by parliament. Sunset provisions have been used in several countries to address extraordinary situations, accelerate reforms or ensure periodic review of regulations. The United States has used sunset clauses in national security legislation, while countries such as India, the United Kingdom and Germany have incorporated similar mechanisms in regulatory and economic reforms.

Nepal's proposal, however, is unusual because it applies the concept specifically to infrastructure development. Rather than creating an entirely new regulatory regime, the Bill would temporarily suspend or relax restrictive provisions in existing laws, including the Forest Act, Environment Protection Act, Land Acquisition Act, Guthi Act, Electricity Act and Public Procurement Act, which are widely viewed as major causes of project delays. The initiative comes as the country continues to struggle with chronic project execution failures. Delays in land acquisition, forest clearance, environmental approvals and procurement have stretched construction timelines by years and inflated project costs. A recent study by the World Bank showed that under-execution of public investment reduced capital spending by an estimated 5% of GDP annually between fiscal years 2020/21 and 2023/24, while public capital stock declined from around 75% of GDP in the mid-1990s to about 54% percent by 2018/19.

Minister for Finance Dr Swarnim Wagle first announced the proposal while presenting the budget for the fiscal year 2026/27 in the last week of May. A committee led by National Planning Commission (NPC) Member Arjun Jung Thapa was subsequently tasked with identifying legal and procedural barriers that have hindered infrastructure delivery, and drafting a framework to address them. Few projects illustrate these challenges better than the Kathmandu-Tarai Expressway. The 70.97-kilometer expressway, launched in 2017 with a four-year completion target, is highly unlikely to meet even its extended deadline that expires in April 2027. Land acquisition disputes, forest clearance requirements and multiple layers of approval have repeatedly delayed the project. The story is similar across many of Nepal's flagship infrastructure projects. The Koshi Corridor, which was started in 2008/09, has not achieved even 50% physical progress. Similarly, the Karnali Corridor has achieved only around one-fifth progress after more than 15 years of construction, while the Mid-Hill Highway remains unfinished even though it has already been nearly two decades since the project started. "The objective of this new legislation is to ensure that obstructive provisions do not hinder nationally important projects for the next 10 years," Thapa, who led the drafting of the Bill, said. The draft has already been submitted to Prime Minister Balendra Shah and is expected to undergo consultations with key ministries before reaching parliament.

A Select List of Priority Projects

The bill adopts a narrow definition of transformative projects. Eligible projects would include reservoir-based hydropower schemes, railway systems, transmission lines and substations of 220 kV or above, irrigation projects covering more than 20,000 hectares, and other advanced technology-based infrastructure projects. Officials say priority would be given to projects included in the National Project Bank and those financed entirely by the government.

To prevent resources from being spread too thinly, the draft limits the number of transformative projects to 15 at any given time, with no more than three projects from any single sector. The restriction appears designed to address a longstanding weakness in Nepal's development strategy: launching too many large projects without allocating sufficient resources to complete them. Recent analyses suggest that, at current funding levels, some major national projects could take more than four decades to finish.

Prime Minister at the Helm

At the center of the proposed framework is a High-Level Project Steering Committee chaired by the Prime Minister. The committee would include the finance minister, the relevant line minister, the Vice Chairperson of the NPC, the Chief Secretary and senior bureaucrats from concerned ministries. The committee would have broad powers to select transformative projects, coordinate government agencies, resolve implementation bottlenecks, monitor progress and issue policy directives. Crucially, it would also be empowered to intervene when public agencies fail to make decisions within prescribed deadlines. Perhaps the most significant reform proposed in the bill is the introduction of mandatory decision-making timelines.

As per the proposed law, approvals related to forest land use, tree felling, hydropower development and other major infrastructure projects would have to be completed within fixed deadlines. Government studies indicate that obtaining permission to cut trees currently takes between 22 and 24 months on average, while land acquisition disputes can delay projects by as much as three years. The Ministry of Agriculture, Forests and Environment, for example, would be required to take a decision on tree-felling requests within 45 days. If it fails to do so, the Steering Committee could grant approval based on recommendations from the concerned ministry. Similarly, agencies responsible for approving hydropower and other major projects would have a maximum of three months to issue decisions. Officials who miss the deadlines could face disciplinary action.

Faster Environmental and Land Approvals

The draft also seeks to streamline environmental approvals. If an Environmental Impact Assessment has already identified and approved the source and quantity of construction materials, a separate Initial Environmental Examination would no longer be required. Officials say eliminating duplication can reduce delays without weakening environmental safeguards. Land acquisition procedures would also be simplified. A Compensation Determination Committee led by the Chief District Officer would oversee compensation decisions, with representation from local governments, district coordination committees, land administration offices and project authorities. While affected households would be consulted, project implementation would not be allowed to stall solely because compensation remains disputed or unclaimed. Recognizing the growing importance of electricity infrastructure for the country, the draft introduces a Right of Electricity Way provision. The measure would allow transmission projects to use government, public, community, trust or private land for transmission corridors. Land used for transmission towers and poles would not necessarily have to be acquired outright, although affected landowners would still be entitled to compensation.

Tackling Procurement Bottlenecks

Procurement delays have long affected execution of infrastructure projects in Nepal. According to World Bank data, Nepal has the slowest procurement process in South Asia, with contracts taking an average of 231 business days to process compared with the regional average of 192 days. The draft law seeks to shorten procurement timelines and impose tougher consequences on contractors responsible for repeated delays. Utility relocation works, such as shifting electricity lines during road expansion projects, could be carried out through simplified procedures. The government would also be required to ensure priority access to electricity, fuel, construction materials, machinery and equipment for transformative projects. Similarly, customs authorities would be required to prioritize the clearance of imported equipment and materials.

The bill also proposes a simplified foreign exchange approval regime. Once a project receives approval from the Nepal Rastra Bank (NRB) within an authorized limit, developers would not need to seek repeated foreign currency approvals throughout the project's implementation period. Likewise, contractors, who repeatedly fail to meet deadlines, would face significantly tougher penalties under the proposed law. Contracts could be terminated after repeated extensions, while contractors, their subsidiaries, directors and joint venture partners could be blacklisted for up to 10 years, up from three years at present. The government would also be able to recover additional project costs arising from delays.

The Risks and the Debate

While support for faster project implementation is widespread, the proposed legislation has also raised concerns among legal experts and environmental advocates. Critics argue that temporarily suspending or relaxing environmental and forest-related procedures could create opportunities for abuse and weaken oversight mechanisms intended to protect natural resources and local communities. The Constitution of Nepal, 2015, guarantees all Nepali people the right to live in a clean and healthy environment under Article 30. Some legal experts question whether overriding environmental safeguards for a decade can be reconciled with those constitutional protections, even if the objective is to accelerate development.

Former government secretary Kishore Thapa supports the broader objective of the Bill but cautions against viewing it as a standalone solution. "While existing laws may be sufficient for day-to-day administrative tasks, they act as a massive anchor for National Pride projects," he said. "Implementing a Sunset Law would be a game-changer because it would force the government to constantly re-evaluate these bottlenecks. It would shift the administrative culture from a business-as-usual mindset to a results-oriented approach, where legal frameworks must prove their utility to survive." However, Thapa also warns that sunset clauses alone cannot solve Nepal's deeper governance challenges. "Simply adding an expiration date to a dysfunctional law is not enough," he said. "Nepal faces a deep-seated challenge where the process of amending existing, outdated acts is painfully slow and inefficient. Therefore, sunset clauses should be used as a catalyst to force the government to prioritize the reform of these specific acts."

Another concern relates to the concentration of decision-making authority in a high-level committee chaired by the Prime Minister. Supporters argue that such authority is necessary to overcome bureaucratic inertia. Critics, however, say it could create excessive executive discretion unless accompanied by strong accountability mechanisms. Another former government secretary Debendra Karki believes the law addresses a genuine and persistent problem. "A recurring nightmare for developers is the issue of forest clearance. Even when the Cabinet makes a high-level decision to proceed with a project, the implementation often gets buried under layers of sub-level bureaucratic red tape," he said.

Karki argues that the proposal could force institutions to coordinate more effectively and justify regulations that impede nationally significant projects. "If an agency cannot justify why its specific regulation should continue to stall a National Pride project, that regulation would simply expire." However, the draft Bill does not fully clarify how projects initiated under the relaxed framework would be treated once the suspended provisions of existing laws come back into force.

A Response to Nepal's Infrastructure Deficit

The proposed legislation reflects growing concern over Nepal's widening infrastructure gap and persistent inability to execute development projects on time. With public capital stock declining and capital budgets routinely underspent, policymakers increasingly see weak implementation capacity as one of the country's biggest barriers to economic growth. Whether the sunset law ultimately succeeds will depend not only on faster approvals and stronger penalties, but also on the government's ability to enforce deadlines, coordinate institutions and maintain political commitment over the next decade.

For Karki, the proposal represents a broader opportunity to rethink how laws are used to support development. "If we move from a static legal environment to one that demands proof of performance, we might finally create the conditions necessary for our national infrastructure to actually be built, rather than just debated in committee meetings," he said.

The country has a long list of projects that should have been completed years ago. Whether this law finally changes that may become one of the most consequential policy questions parliament faces this year.

(Originally published in July 2026 issue of New Business Age magazine.)