Bhutan to Build Southern Highway to Boost Growth, Cut Poverty

News Release | 11 November 2009

MANILA, PHILIPPINES - An efficient and reliable road network is hampering development in southern Bhutan, and the government is now targeting a major road link there to boost growth and livelihood opportunities in one of the country's most remote and poor regions.

To support the government's plans, Asian Development Bank's (ADB) Board of Directors approved a grant of $38.76 million for a project that will construct or upgrade five sections of an east-west highway route in the south. An existing highway in the north connects eastern and western sections of landlocked Bhutan, but the lack of a similar link in the south has been a major constraint to travel and new economic opportunities.

The project, covering road sections totaling 180 kilometers, will provide an alternate transit route for freight and passengers, opening up new trading opportunities with India, Bhutan's largest trading partner. It will also bring major social benefits including better access to health and education facilities. Equipment for road design, and measuring load levels and vehicle emissions will be provided to reduce overloading, pollution, and to improve road safety.

"The project will increase passenger and freight transport within the country and with neighboring India, spur industrial development in the south, and provide new livelihood opportunities," said Hiroaki Yamaguchi, Senior Transport Specialist in ADB's South Asia Department.

Bhutan's terrain is mountainous and prone to landslides, so the project incorporates design and construction measures sensitive to the landscape. Controlled blasting, limited use of bulldozers, log and boulder barriers, and environmentally-sensitive slope protection measures will be used. The alignment of the highway was decided after consultation with communities, and measures will be taken to minimize social and environmental impacts.

A technical assistance grant of $400,000 will also be provided to build up the survey, design, construction and management capabilities of Bhutan's Department of Roads. ADB plays a major role in road network development in Bhutan, providing loans and technical assistance of around $58 million to the sector since 1983.

ADB's financing - which makes up 71% of the total project cost of $54.32 million - includes a $10 million portion from its concessional Asian Development Fund. The Government of Bhutan is providing the balance of $15.56 million equivalent. The Bhutan Department of Roads is the executing agency for the project, which is due for completion around December 2014.