KATHMANDU: The Japanese contractor Hazama Ando Corporation, which is building the national pride Nagdhunga–Sisnekhola Tunnel, has demanded Rs 3.30 billion in compensation, citing multiple challenges during construction.
According to project officials, the company has claimed losses due to changes in tunnel design, repeated local obstructions, foreign currency fluctuations, and COVID-19-related disruptions. The contractor has also requested an extension of time, saying work could not continue smoothly because of these issues.
Project Director Soujanya Nepal confirmed that the claim has been forwarded to the Dispute Board after the Department of Roads and the consultant did not fully accept the contractor’s demand.
“The contractor has claimed Rs 3.30 billion citing local obstructions, changes in the tunnel’s support pattern, COVID, and currency value increases,” said Nepal. “As the claim has not been fully accepted, the matter is now under review by the Dispute Board.”
Major claim for design change
The largest portion of the compensation around Rs 2.80 billion, has been sought for changes in the tunnel’s support structure. During excavation, the soil and rock conditions were found to be weaker than expected, forcing a redesign that raised construction costs.
The contractor has also sought Rs 200 million for work stoppages caused by local protests and another Rs 200 million for delays and additional safety measures during the COVID-19 pandemic.
Similarly, Rs 100 million has been claimed for currency fluctuations and other technical adjustments.
The contract allows payments in Nepalese rupees, U.S. dollars, and Japanese yen. The company argues that the sharp rise in the U.S. dollar’s value since the agreement was signed has added to its financial losses.
Board to decide; parties may appeal to arbitration.
The Dispute Board is currently reviewing the claim and will decide on the final compensation amount. Both parties are required to comply with the Board’s decision, though either side may pursue arbitration if dissatisfied. Expenses related to the dispute process will be shared by both sides.
96 percent work completed
Project officials said about 96 percent of construction has been completed. The main tunnel, flyover, and internal systems, such as ventilation, firefighting, lighting, CCTV, and safety equipment have already been installed.
Remaining tasks include slope protection at the western portal and toll-booth construction. The second project extension ends on October 25, 2025, and the government aims to bring the tunnel into operation by mid-January 2026.
The project is preparing to call for international tenders to select an experienced operator, as Nepal has limited experience in tunnel management. Approval for the procurement directive and bid documents has already been obtained from the Public Procurement Monitoring Office.
The Cabinet has also finalized the toll rates for vehicles using the tunnel. The project’s total cost stands at around Rs 22 billion.
