Kathmandu, Jan. 27 -- phase expansion of the Ring Road remains stalled as the Nepal government has yet to approve tax exemptions, even though the Chinese side has finalised the design.

Initially, delays came from the Chinese side, but now the holdup is due to Nepal's slow policy-level decision. The tax exemption file has been sent to the Finance Ministry, said Sushil Babu Dhakal, chief of the Development Assistance Coordination and Quality Division under the Ministry of Physical Infrastructure and Transport. The implementation agreement defines the roles of each side, after which China will select a contractor for construction.

Dhakal said the Chinese contractor will not pay any taxes during construction. Once the agreement is finalised...