Nepal is a landlocked country with China to the North and India to the South. Because of its mainly mountainous terrain and difficult weather conditions, roads and aviation are the major modes of transportation in the country. The presence of railways is negligible, and urban transport services are few. The country uses India’s eastern port of Kolkata as its gateway to the sea.

Roads. Nepal’s total road network and density are low and only 43 percent of the population has access to all-weather roads. More than 60 percent of the network is concentrated in the lowland (Terai) areas of the country. In 2007, the network consisted of 17,282 km of roads. The road network expanded by 5%, on an average a year, over the last decade, with faster growth until 2002. Over the 2003-05 period an additional 575 kms of roads (equivalent to 3.5 percent of the existing length) were built, focusing on connecting district headquarters with the national network and improving access between rural areas and market centers. Nepal’s road network annually increased by 6.7% between FY95/95 and FY03/04, with the largest expansion occurring in roads classified as "district or rural roads", which grew annually by 11% during this period.

The poor condition of the road network hampers the delivery of social services in the remote hill and mountainous districts and affects the country’s economic development. High transport costs and the lack of connectivity are major impediments to Nepal’s development. This pro-poor expansion, as well as improved modes of transportation increased access to shops, markets, schools and hospitals. Improvements in rural connectivity helped raise non-agricultural employment and incomes.

Air transportation. With 42 domestic and one international airport, civil aviation plays a vital role in linking the hilly and mountainous parts of the Kingdom. Most of them are green field without modern navigation systems. Domestic Airports are crucial to the growth of trade and tourism in the country as villages in hills and mountains are inaccessible by roads. The international airport at Kathmandu connects Nepal with the countries of Europe, and South and East Asia.

Railways. The country has the total physical railway line of the 57 km. Nepal Railways Company (NRC), a government agency owns the 53-kilometer narrow-gauge rail line, which is composed of two sections - 32-kilometer section between Jaynagar in India to Janakpur in Nepal, and a 21-kilometer portion from Janakpur to Bijalpura. Janakpur to Bijalpura network is not operational at present. The Indian Railways manages the six-kilometer railway line (of which four-kilometers fall in Nepal) that connects Inland Clearance Deport (ICD) in Birgunj to Raxaul, India.

Challenges. The country faces several policy, institutional, and financial constraints in the development of its transport sector:
• Lack of integrated sector policies and an effective implementation strategy.
• Weak institutional capacity, inefficient incentive structure, poor monitoring, and the lack of accountability of the public sector agencies.
• Weak domestic resource mobilization and heavy dependence on foreign assistance in the road sector.
• About 60 percent of development expenditure for roads is met from donors’ contributions.
• Inadequate and irregular road maintenance resulting in the rapid deterioration of road conditions and quality.
• Poor accessibility in the remote hill and mountainous districts of the country, and insufficient connectivity in 12 district headquarters, which are not connected by road.
• Poor maintenance systems for motor vehicles which leads to an increasing number of polluting vehicles and road accidents.
• High transportation costs for Nepalese exports due to transit and high vehicle operating costs.
• Unreliability of freight transit services, as the average transit time through India varies from 3 to 8 days.
• The backlog of road maintenance is ever increasing, rendering the present local road network unserviceable.

Key Government Strategies.
The importance of roads, including the rural roads, has been recognized and highlighted in several key national plans and strategies. The Government of Nepal’s (GoN) Tenth Five Year Plan (2003-2007) has emphasized the role of roads, civil aviation, and tourism in achieving the country’s overarching objective of reducing poverty in the country. The Plan aims to connect 10 unconnected district head quarters through roads (of which 6 have been connected by the end of FY 2006-07); establish an enabling environment for public private partnerships; establish and operate a sustainable Roads Board for financing road maintenance and efficient road management; and institutional reform of the Department of Roads (DoR) based on the Government’s reform policy.

In 2001, GoN established a Road Transport Policy and developed a 20-year road master plan. Recently, DoR has completed on an integrated 10-year sector-wide plan and a Priority Investment Plan (2007-2016) for the development and management of strategic roads, including institutional development requirements. The PIP is based on the GoN’s accessibility targets, namely to bring the entire hill population within a four hour walk to an all season road and the Terai population within two hours. This objective has been formulated in the 2004 Local Infrastructure Development (LID) policy, itself based on the National Strategy of Rural Infrastructure Development (1997). The policy also commits GoN to a decentralized governance system for rural roads development and operation in districts. GoN’s policies also recognize the significant returns of rural road maintenance. The Roads Board Nepal (RBN) was established in late 2003, and has been operationalized with the objective to create a stable fund through the collection of road user charges, channel it to the road sector to implement the integrated annual plan [IAP] and other road development and research activities. However, RBN still requires improvement for adequate resource generation and efficiency to be able to fulfill its mandate.

World Bank Support
The World Bank is supporting two projects in the roads sector in Nepal. The Road Maintenance and Development Project (RMDP) supports the Country Assistance Strategy objective to reduce poverty in rural areas, by improving rural access, and, prompting higher agricultural output, as well as non-farm income, in remote hill areas of the country. This project is closing in June, 2007 and a new project is under preparation with a target to implement by January 2008.

The Rural Access Improvement and Decentralization Project (RAIDP) is ongoing, which was designed for the residents of participating districts to enable them utilize improved rural transport infrastructure, and services, and also benefit from enhanced access to social services, and economic opportunities.

NEPAL: Transport Sector Key Statistics
Particulars Units As of 2007
Length of Roads Km. 17,282
Main Roads Km. 10,142
Paved Roads % 31
Access to All-Season-Roads (within 30 mins walk) % 43
Road Density - LAND km/1,000 sq. km. 121
Rail Track Length Km. 59
Total No. of Ports None
Airports 43
International 1
Dry Port 1