Nepal, Japan sign major ¥34.59 billion loan agreement for Koteshwor junction overhaul

KATHMANDU: Nepal and Japan have signed a landmark concessional loan agreement worth ¥34.59 billion Japanese Yen (approximately NPR 31.76 billion) to upgrade the heavily congested Koteshwor–Jadibuti corridor—one of the busiest transport junctions of the Kathmandu Valley. The loan signing ceremony took place today at the Ministry of Finance in the presence of Finance Minister Rameshwar Prasad Khanal.

The financing, extended through the Japan International Cooperation Agency (JICA), marks one of Japan’s largest recent infrastructure commitments in Nepal. The soft loan comes with a 10-year grace period, 30-year repayment period, and an ultra-low 0.2% annual interest rate, continuing Japan’s decades-long pattern of highly concessional development assistance to Nepal.

Underpass, Flyover Planned to Ease Valley’s Worst Traffic Bottleneck

The Koteshwor–Jadibuti segment is a chronic choke point linking Kathmandu, Lalitpur, Bhaktapur and the BP Highway. Under the project, the government will construct:

A modern underpass,

A major flyover structure, and

Associated junction improvement works

The project is expected to significantly reduce vehicle congestion, streamline inter-city movement, and enhance road safety. The implementation will be carried out by the Department of Roads under the Ministry of Physical Infrastructure and Transport.

Officials said the overhaul will serve as a long-term solution to Kathmandu Valley’s transportation gridlock, improving mobility for hundreds of thousands of commuters daily.

High-Level Signing Between Nepal and Japan

The formal diplomatic procedure—Exchange of Notes—was signed by Finance Secretary Dr. Ghanshyam Upadhyaya and Japanese Ambassador to Nepal Toru Maeda.
The loan agreement itself was signed by:

Dr. Dhaniram Sharma, Joint Secretary and Head of the International Economic Cooperation Division, Ministry of Finance and Mitsuzaki Mazuki, Chief Representative of JICA Nepal.

Following the signing, JICA Nepal’s Chief Representative Mazuki, Ambassador Maeda, and Finance Minister Khanal delivered remarks emphasising the significance of the bilateral partnership and the transformative potential of the project.

Japan Reaffirms Long-Standing Support to Nepal

Ambassador Toru Maeda highlighted that the Koteshwor Junction Improvement Project—implemented through Japan’s soft loan window—would bring substantial improvements to the Valley’s transport network. He described the project as another milestone in the decades-long friendship and development cooperation between the two nations.

He expressed confidence that the infrastructure upgrade would deliver tangible relief to commuters and enhance the overall efficiency of Kathmandu’s urban transport system.

Nepal Sees Project as a Long-Term Mobility Breakthrough

Finance Minister Rameshwar Prasad Khanal said the project fits squarely within Nepal–Japan cooperation priorities, targeting one of the Valley’s most congested intersections. He stressed that the initiative would bring long-term structural improvements to Kathmandu’s traffic management and urban mobility.

Minister Khanal thanked the government of Japan for its continued support in areas including infrastructure, disaster resilience, energy, health, and human resource development.

What Comes Next

With the financing confirmed, the Department of Roads is now responsible for advancing the project design, procurement, and phased construction. Officials indicated that the works will be coordinated with ongoing road expansions along the Araniko Highway and Ring Road to minimize disruptions.

The ceremony was attended by senior officials from:

The project is expected to become one of the most impactful urban transport upgrades in Kathmandu in recent years.