Government prepares ‘Sunset Law’ to remove legal barriers in infrastructure development

KATHMANDU: The Government of Nepal has prepared a draft ‘Sunset Law’ aimed at removing long-standing legal and procedural bottlenecks that have slowed down infrastructure development projects across the country.

The proposal, developed by a committee formed to study legal reforms in the infrastructure sector, reviews restrictive provisions in existing laws such as the Forest Act, Environmental Protection Act, Land Acquisition Act, and Public Procurement Act. The objective is to streamline approval processes and accelerate project implementation.

According to Arjun Jung Thapa, coordinator of the committee and member of the National Planning Commission, many development projects in Nepal remain stalled for years due to procedural delays and overlapping legal requirements.

“The main objective of the proposed framework is to eliminate unnecessary delays in development projects that have already complied with legal procedures,” Thapa said at a program organized by News Agency Nepal.

Draft to Be Submitted to Government This Week

The committee is preparing to submit the initial draft of the Sunset Law to the Government of Nepal this week. The proposal will then be discussed with the Ministry of Finance, Ministry of Law, Ministry of Forest and Environment, Ministry of Energy, and Ministry of Physical Infrastructure before being finalized.

Once approved by the Council of Ministers, the proposal will be tabled in Parliament for legislative endorsement.

Key Legal Reforms Proposed

The draft includes several major reforms intended to simplify infrastructure project approvals and reduce administrative delays.

One of the key provisions states that if an approved Environmental Impact Assessment (EIA) already specifies the source and quantity of construction materials, a separate Initial Environmental Examination (IEE) will not be required again. This is expected to reduce duplication in environmental clearances.

Similarly, the proposal mandates that decisions related to forest land use and tree cutting must be made within three months. If the responsible authority fails to make a decision within the stipulated time, a high-level directive committee chaired by the Prime Minister will have the authority to proceed with necessary approvals.

The framework also introduces special provisions for renewable energy projects and infrastructure developments within national parks and protected areas, which have historically faced regulatory delays.

Projects declared as “transformational projects” by the Government of Nepal will also be required to receive decisions within three months, ensuring time-bound approvals.

Accountability Mechanism for Delays

The proposed law includes accountability provisions for officials who fail to act within the designated timeframe. In such cases, disciplinary action may be taken, and the directive committee will have the authority to move the process forward.

The committee has also recommended amendments to several existing laws, including the Guthi Act, Land Acquisition Act, Electricity Act, and Public Procurement Act, to align them with the proposed reform framework.

Simplifying Procurement and Utility Relocation

The draft proposes significant simplification of public procurement procedures, particularly for infrastructure works such as relocating electricity lines during road expansion projects. Instead of lengthy procurement processes, a fast-track mechanism has been suggested.

This is expected to reduce delays in critical infrastructure projects that often face setbacks due to procedural requirements.

Use of Construction Materials Within Projects

Another notable provision addresses the use of construction materials such as stones, gravel, and sand extracted during excavation or road cutting.

If such materials are used within the same project, no royalty will be charged. However, if they are transported or sold outside the project site, applicable royalties must be paid to the concerned local authorities.

The provision aims to resolve long-standing practical challenges faced by infrastructure developers who have argued that royalty charges on internally used materials unnecessarily increase project costs and delays.

‘Rule of Law, Not Rule by Law’

Thapa emphasized that the proposed framework is designed under the principle of “rule of law” rather than “rule by law,” ensuring that legal provisions facilitate development rather than obstruct it.

He said the objective is not to weaken laws but to remove impractical and redundant procedural barriers that hinder infrastructure progress.

Broader Legal Framework Approach

Experts participating in the discussion, including former government officials, suggested that Nepal may require a dedicated infrastructure law or a broader legal reform framework to address systemic challenges in project implementation.

They argued that the proposed Sunset Law should not be viewed as project-specific but rather as a structural reform aimed at removing legal obstacles across the infrastructure sector.

Price Adjustment Clarification

The discussion also addressed concerns from construction entrepreneurs regarding price adjustments in contracts. Experts clarified that price adjustments should not be seen as additional payments but as a mechanism to reflect changes in market prices.

If costs rise, contract values are adjusted upward, and if they fall, they are adjusted downward accordingly, ensuring fairness rather than inflationary increases.

Reform Push to Accelerate Development

The proposed Sunset Law is part of a broader government effort to accelerate infrastructure development by reducing bureaucratic delays and improving inter-agency coordination.

If enacted, the framework is expected to significantly reshape Nepal’s infrastructure governance system by introducing strict timelines, accountability mechanisms, and streamlined approval processes for major development projects.