ADB to Help Improve Public Transport in Kathmandu

News Release | 23 July 2010

MANILA, PHILIPPINES - The Asian Development Bank (ADB) will provide a maximum of $20 million to help improve the urban transport system and help reduce congestion and pollution in Nepal's capital city of Kathmandu.

The ADB Board of Directors has approved a $10 million loan and a grant of up to $10 million, both from ADB's Special Funds resources, for the Kathmandu Sustainable Urban Transport Project.

Among the key improvements envisaged under the project are the reorganization plan of the public transport network system in Kathmandu and the introduction of two pilot bus routes financed through the government-managed Town Development Fund. The fund will also promote the usage of electric or low-emission vehicles and help reduce pollution on the roads of Kathmandu. Making heritage routes pedestrian-only and improvement of facilities, especially sidewalks, is another important component of the project and will make Kathmandu city-center more pedestrian-friendly. Traffic management works and measures, such as junctions' improvement and monitoring, will help solve congestion on a short term.

"Any effort to improve the urban transport system in Kathmandu must be led by the public sector, and in the case of public transport the Department of Transport Management (DOTM). ADB is pleased to work closely with DOTM on this project, which will also include support to DOTM to build up knowledge and skills in urban transport management and strengthen organizational effectiveness," said David Margonsztern, Urban Development Specialist in ADB's South Asia Department.

As Nepal moves into a new phase of reconciliation and rebuilding following a decade-long conflict, one challenge it needs to address is constraints in the urban transport system in Kathmandu. Population growth, rapid urbanization, and the increasing number of vehicles have led to traffic congestion, road accidents, environmental degradation, and poor public transport operation and services.

"Through this project, we hope to provide the city with a more efficient and sustainable urban transport system that will support economic expansion, help address climate change, and mitigate air pollution," added Sultan H. Rahman, Director General of ADB's South Asia Department.

The ADB loan will have a 32-year term, including a grace period of 8 years, an annual interest charge of 1% during the grace period and 1.5% thereafter. The Government of Nepal will contribute $7.90 million to complete project funding.