Nepal and Japan have signed an additional concessional loan agreement for the Nagdhunga Tunnel Construction Project. Under the agreement, Japan will provide 5,700 million Japanese yen, equivalent to around Rs. 5.26 billion, as additional loan assistance for the project.

The agreement was signed at a ceremony held at the Ministry of Finance. On Nepal’s behalf, Finance Secretary Dr. Ghanshyam Upadhyaya signed the Exchange of Notes and Record of Discussions, while Japanese Ambassador to Nepal H.E. Maeda Toru signed on behalf of the Government of Japan. The loan agreement was also signed by officials from the Ministry of Finance and JICA.

According to the ministry, the loan carries an annual interest rate of 1.95 percent, while a 0.05 percent annual service charge will apply. The repayment period will be 20 years, including a 10-year grace period.

Earlier, Nepal and Japan had signed a concessional loan agreement of 16,636 million Japanese yen for the same project on 22 December 2016. The ministry said the additional loan became necessary due to increased project costs caused by road alignment changes, tunnel construction requirements, design changes, access road needs, the COVID-19 pandemic, local obstructions and other implementation challenges.