House of Representatives Passes Alternative Development Finance Bill

The government has introduced a new funding mechanism to address Nepal’s infrastructure financing gap, with the House of Representatives passing the Alternative Development Finance Mobilization Bill, 2025 on Friday. The legislation establishes a Remit Fund to mobilize resources from Non-Resident Nepalis (NRNs) and migrant workers for large-scale infrastructure projects.

The bill allows financing for specific projects through instruments such as bonds, equity, debt, or hybrid tools. Funds may be raised directly from investors or the general public, with guarantees from the Government of Nepal, international financial institutions, or project-specific bodies. A guarantee fund can also be established to secure loans or bonds, ensuring broader investor confidence. These resources will be channeled into infrastructure development.

By approving this bill, the government seeks to bridge existing investment shortfalls in national priority projects. Once endorsed by both houses and enacted, the law will provide the state with greater flexibility in mobilizing capital.

The legislation envisions establishing an Alternative Development Finance Fund with authorized capital of Rs 100 billion and paid-up capital of Rs 25 billion. Officials expect this to unlock new investment avenues at a time when many development projects are stalled or underfunded. Studies suggest Nepal will require more than Rs 10,000 billion in infrastructure investment over the next decade, while current annual budget allocations hover around Rs 300 billion.

The fund is designed to support large-scale projects such as the East-West electric railway, monorail in Kathmandu, and Nijgadh International Airport. These ventures are expected to operate under public-private partnership (PPP) models.

With the bill’s passage, the government also hopes to tap underutilized capital held by institutions like the Employees’ Provident Fund, Citizens Investment Trust, Social Security Fund, and insurance companies, channeling them into infrastructure projects.

Provincial and Local Participation

The Finance Committee has added provisions allowing provincial and local governments to purchase shares of the fund, enabling them to participate as partners in infrastructure financing. Once approved by the National Assembly, the law will pave the way for PPP-based mega projects.

Finance Minister Bishnu Prasad Paudel, speaking in Parliament, described the bill as a milestone in unlocking new pathways for Nepal’s physical infrastructure development. He emphasized that the legislation addresses pressing development needs and demonstrated Parliament’s ability to deliver important reforms swiftly. The bill’s core objective, he added, is to mobilize alternative resources and generate high returns through large-scale infrastructure investments.