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The race to operate Nepal’s strategically significant Nagdhunga–Sisnekhola Tunnel has effectively tilted toward Chinese companies after seven firms cleared the technical evaluation stage, with the majority backed by Chinese state-linked contractors.

The tunnel, constructed with concessional loan assistance from the Government of Japan, will now likely be operated and maintained by a Chinese-affiliated company, subject to financial bid opening scheduled for March 14 (Chaitra 1).

The Nagdhunga Tunnel Construction Project issued a public notice on Friday confirming that seven out of ten applicants passed the technical assessment phase.

Chinese-Backed JVs Dominate Shortlist

The technically qualified bidders include:

- Gansu Hengtong Road & Bridge Engineering Co. (in JV with Kasthamandap Construction)

- Jiangxi Tianfeng Construction Group (in JV with Danfe Construction)

- China First Highway Engineering Company (with Samanantar Nirman Sewa)

- Ranjian Railway Construction Group (with Bedanshree Infrastructure)

- Chongqing Yuxin Road & Bridge Development (with ART Construction)

- Shaanxi Road & Bridge Group Corporation Ltd (with Bright Bull Nirman Sewa)

- Elsamex Maintenance Services Ltd (with Pashupati Shivaji Construction)

Among the seven, six are Chinese companies partnered with Nepali firms under joint venture arrangements. Three Indian and one Turkish company had participated in the bidding process, but most Chinese applicants have progressed to the next stage.

Financial Bids to Decide Final Operator

The financial proposals of the shortlisted companies will be opened on March 14. The bidder offering the lowest financial proposal will be awarded the contract for tunnel operation and maintenance.

Under Nepal’s Public Procurement Act, the selection will be based strictly on competitive financial criteria among technically qualified bidders.

Japan’s Concerns, Nepal’s Procurement Position

Sources confirm that the Government of Japan had expressed reservations about awarding tunnel operation responsibilities to certain Chinese state-owned enterprises, particularly those previously blacklisted by multilateral institutions such as the World Bank and the Asian Development Bank.

However, Nepalese authorities have maintained that procurement decisions must comply with domestic public procurement laws and cannot incorporate external political conditions beyond legal eligibility criteria.

Secretary at the Ministry of Physical Infrastructure and Transport, Keshav Kumar Sharma, stated that the process will proceed strictly according to Nepal’s legal framework.

He clarified that since the Chinese companies are operating through joint ventures with Nepali firms, the actual operational execution would involve domestic partners, reducing geopolitical sensitivity.

Five-Year Operation Contract

The selected service provider will be responsible for:

- Full tunnel management and maintenance for five years

- Traffic management and emergency rescue operations

- Toll collection and financial reporting

- 24/7 operations throughout the year

- Maintenance of the 2.8 km access roads connecting Kathmandu and Dhading

While the operational cost will be borne by the Government of Nepal, all toll revenue collected must be deposited daily into the account of Road Board Nepal, which will also oversee monitoring and compliance.

Financial Projections

The tunnel is projected to generate approximately Rs 350 million annually in toll revenue. The estimated annual operational expenditure stands at around Rs 300 million, though the final cost structure will depend on the winning bidder’s financial proposal.

Remaining works before full operation include:

- Final service provider selection

- Toll plaza construction

- Landslide management on the Dhading side

Strategic Infrastructure with Geopolitical Undertones

The Nagdhunga Tunnel is Nepal’s first road tunnel project of its scale and represents a critical decongestion corridor linking Kathmandu Valley with the national highway network.

While financed by Japan, operational control now appears likely to move toward Chinese-backed firms - reflecting Nepal’s complex infrastructure geopolitics where financing, construction, and operation often involve multiple global powers.

With financial bids pending, the final award is expected to formalize what industry observers describe as an “almost certain” Chinese-led operational outcome.