The government has proposed establishing an Infrastructure Development Fund with authorized capital of Rs 1 trillion to increase investment in urban and other infrastructure development across Nepal. The proposed fund would channel financing to provincial and local projects through loans, grants, co-financing, bonds and other financial instruments, while legal provisions relating to infrastructure development would be amended and consolidated. Loans are proposed to be repaid from revenues generated by the projects they support.
How the proposed fund would work
The fund is intended to provide a financing channel for infrastructure projects undertaken at provincial and local levels. Rather than relying on a single form of support, it could use a mix of lending, grants, co-financing and bond-based instruments. The proposal also refers to the use of various other financial instruments, although the available details do not specify which instruments would be selected for particular projects.
That range of options could allow support to be structured according to the financing needs of individual projects. Loans would create a repayment obligation, while grants and co-financing would offer other ways to contribute resources. The proposal does not set out the eligibility criteria, project selection process, lending terms or the share of funding expected to come from each instrument. Those details would be important in determining how the fund would operate in practice.
The Rs 1 trillion figure is described as the fund’s authorized capital. That is the proposed capital limit, not confirmation that the full amount has already been raised, deposited or committed to projects. The summary of the proposal does not identify the fund’s sources of capital or specify how much money would be available for initial lending and investment.
Project revenues and repayment
A central feature of the plan is that loans would be repaid from project revenues. Linking repayment to the income generated by an infrastructure project would make the project’s ability to produce revenue relevant to its financing. However, the proposal summary does not explain how revenues would be assessed, what repayment periods might apply or how the arrangement would work for projects that do not generate direct income.
The fund is also expected to support projects through grants and co-financing, alongside loans. These different channels matter because not every infrastructure project will have the same financing requirements or revenue profile. The government’s proposal points to a broader funding approach, but details on how the fund would balance repayable and non-repayable support have not been provided in the information available.
For provincial and local bodies, the proposed mechanism could offer an additional route to seek financing for infrastructure development. Its practical reach would depend on how projects are assessed and approved, how funding is allocated among levels of government and how the different financial instruments are applied. The proposal summary does not name specific projects or identify an initial list of recipients.
Legal changes and next steps
The government plans to amend and consolidate legal provisions related to infrastructure development. The stated aim of this legal work is to support the proposed funding arrangement, but the summary does not describe the specific laws involved or the precise amendments being considered. The legal framework would help establish how the fund is authorized and how its financing activities are governed.
The proposal, as described, sets out an intended structure: a fund with authorized capital of Rs 1 trillion, support for provincial and local infrastructure, a mix of financing tools and repayment of loans from project revenues. It does not provide a timetable for establishing the fund or details about its governance, share structure, operational procedures or financial commitments. Those elements will determine how the proposal moves from a stated plan to an operating source of infrastructure finance.
The proposed fund therefore signals an effort to organize investment for urban and other infrastructure development under a dedicated mechanism. Its impact will depend on the final legal provisions, the capital actually made available and the way projects are selected and financed. Until those details are set out, the Rs 1 trillion authorized capital and the range of proposed instruments describe the scale and intended design of the plan, rather than confirmed funding for specific infrastructure projects.
