- Nepal mandates domestic cement for national roads to boost local industry, reduce imports, and utilize idle production capacity.
- The policy aims to accelerate sluggish capital expenditure by prioritizing domestic materials in public infrastructure and disaster reconstruction projects.
- Although concrete roads have higher upfront costs, they offer superior durability and lower lifecycle maintenance compared to traditional asphalt.
- Success depends on site-specific technical planning, strict quality control, and transparent bidding to prevent monopolies and price spikes.
Kathmandu, Nepal: Nepal’s struggling cement manufacturers are poised for a significant turnaround following a strategic government initiative to mandate domestic cement in national road construction projects. Aimed at curbing bitumen imports, spurring sluggish development expenditure, and maximizing local production, the shift toward cement-concrete roads promises to re-energize both the industrial sector and the broader economy.
This policy shift gained official traction following the Cabinet’s approval of the ‘Directive on the Promotion and Use of Domestic Products in Public Procurement, 2026’. Under these new guidelines, public infrastructure projects—including roads, bridges, and government buildings—must prioritize quality-compliant domestic materials. Furthermore, project designers are explicitly prohibited from specifying imported materials when viable domestic alternatives exist. Demonstrating its commitment, the government has already initiated bidding processes for several concrete road projects.
This policy intervention comes at a critical juncture for domestic cement producers. Over recent years, despite rapid expansion in installed capacity, factories have been forced to operate far below potential due to a sharp downturn in domestic construction. By guaranteeing stable demand through public works, the initiative will allow manufacturers to utilize idle capacity, reduce per-unit production costs, and unlock fresh capital investment. Beyond the factory floor, the increased activity is expected to generate significant spillover benefits across supply chains, freight transportation, and employment.
The timing of this policy also addresses a persistent fiscal bottleneck: sluggish capital expenditure. Official figures reveal that three and a half months into the current fiscal year, the government had spent just 6.83 percent of its allocated capital budget. Because public infrastructure spending directly stimulates demand for local labor, materials, and equipment, accelerating procurement for concrete roads serves as an immediate catalyst to mobilize frozen state funds into the real economy.
Moreover, the policy aligns with urgent post-disaster reconstruction needs across the flood-ravaged Bhote Koshi–Trishuli corridor. Joint preliminary assessments by the National Planning Commission and the National Disaster Risk Reduction and Management Authority estimate total damage at NPR 408 billion, with reconstruction costs projected at NPR 723 billion. Deploying domestic cement for rebuilds—specifically for embankments, bridges, and public structures—will keep a substantial portion of disaster recovery funding circulating within the national economy.
Regarding funding, the government faces calls for clear fiscal management and transparency. While more than NPR 18.28 billion has been assembled across relief accounts—including NPR 17.63 billion in the Prime Minister’s Disaster Relief Fund—these resources are legally earmarked for immediate humanitarian aid and rescue. Long-term infrastructure reconstruction must instead be financed through primary budgetary allocations and ministry funds, ensuring strict accountability between emergency relief and capital development.
Despite its clear advantages, the transition to concrete infrastructure presents a key financial hurdle: initial capital outlay. Data from the Federation of Contractors' Associations of Nepal (FCAN) indicates that constructing a standard 5.5-meter-wide concrete road costs approximately NPR 30.5 million per kilometer—roughly 72 percent higher than a conventional asphalt road at NPR 17.7 million per kilometer. However, experts emphasize that concrete roads offer superior durability and significantly lower lifecycle maintenance costs, making them more cost-effective over the long term.
Ultimately, achieving maximum return on public investment will require a balanced, site-specific approach. Technical decisions must account for terrain, soil stability, drainage, and projected traffic density rather than relying on a blanket approach. To ensure success, the government must enforce rigorous quality standards, maintain transparent bidding to prevent market monopolies, and guard against artificial price spikes. If executed effectively, this policy will transform paper directives into durable infrastructure, revitalizing domestic industry while driving sustainable economic growth.
