Roads are the hardest hit
Bhutan’s infrastructure push under the 13th Five-Year Plan (FYP) is facing mounting pressure, with major funding shortfalls emerging across critical road and water supply projects. According to the Ministry of Infrastructure and Transport (MoIT), a total of 12 projects – eight in the road sector and four in water supply – are grappling with significant resource gaps, raising concerns about delays, scaling back of scope, and spillover into the next plan period.
The ministry estimates an overall funding gap of Nu 7.35 billion, with the road sector alone accounting for the bulk of the shortfall. While infrastructure development remains central to Bhutan’s economic growth and connectivity goals, the widening gap between allocated budgets and actual project costs underscores growing fiscal and implementation challenges.
Road infrastructure, a key driver of regional connectivity and economic integration, is the hardest hit. Several high-priority projects show substantial discrepancies between planned allocations and revised cost estimates. Among them, the improvement of the Wangdue–Wakleytar road (21 km) stands out with one of the largest shortfalls. Despite an allocation of Nu 148.75 million under the 13th FYP, the project’s estimated cost has surged to Nu 2,056.71 million, leaving a staggering gap of Nu 1,907.96 million. The increase reflects a shift in project scope—from basic blacktopping and drainage to full national highway-standard development.
Similarly, the Rilangthang–Sechamthang road (11.02 km) remains entirely unfunded, with an estimated cost of Nu 435.86 million. While survey works have been completed, the absence of secured financing means construction timelines remain uncertain, with design works only scheduled for the 2026–27 fiscal year.
Inter-dzongkhag connectivity, another priority area, is also under strain. Against an allocation of Nu 1,250 million, the estimated requirement stands at Nu 2,673.79 million, creating a gap of Nu 1,423.7 million. This shortfall directly affects efforts to strengthen national connectivity and improve access between regions.
The Lunana Dzongkhag road project—critical for one of Bhutan’s most remote regions—faces a funding gap of Nu 815.57 million, with only Nu 154.50 million allocated against a total estimated cost of Nu 970.08 million. The project includes both formation cutting and permanent works, making it essential yet resource-intensive.
Meanwhile, the broader Dzongkhag Road Improvement Programme reflects systemic pressures within the sector. With a total estimated cost of Nu 6,961.92 million against an allocation of Nu 4,869.92 million, the programme faces a gap of Nu 2,092 million. Although Nu 1,000 million has been committed by the Office of Cabinet Affairs and Strategic Coordination, a significant shortfall persists.
Other road projects—including Trongsa–Reffee, Yongkola–Lingmithang, and Darachu–Relangthang—report smaller but still notable gaps ranging from Nu 75 million to Nu 303 million. Altogether, the road sector has an allocation of Nu 9,112.72 million against a requirement of Nu 15,689.06 million, resulting in a cumulative gap of Nu 7,354.13 million.
Water supply projects, though fewer in number, are equally critical and face their own funding challenges. The Department of Infrastructure Development has identified gaps in potable and climate-resilient water supply systems across 20 dzongkhags and three thromdes.
In Mongar, the Nagamphu and Ringphu pumping system requires Nu 40 million, with no revised allocation currently secured. The Trashigang town intake and transmission system faces a similar funding gap of Nu 60 million.
In Lhuentse Dzongkhag, a comprehensive project involving a transmission main, water treatment plant, and distribution system remains entirely unfunded, with an estimated cost of Nu 120 million. Meanwhile, the Trashiyangtse Throm water supply project, estimated at Nu 175 million, has secured only Nu 67 million, leaving a gap of Nu 108 million.
According to MoIT, many of these projects were initially proposed under external financing frameworks such as GCF-FAO and the Water Flagship Programme. However, delays in approval and funding confirmation have stalled progress. In several cases, cost estimates are also pending finalisation of detailed project designs, further complicating planning and execution.
Beyond funding gaps, implementation challenges are compounding the situation. The Government Office Complex project, with a total requirement of Nu 1.63 billion, is expected to spill over into the 14th FYP, with Nu 1.37 billion deferred. Similarly, the Hontsho Crematorium project has seen minimal progress—only Nu 5.47 million spent out of an approved Nu 600 million—due to halted design work and the need for specialized technical expertise.
Urban development initiatives have also been affected, particularly due to the non-availability of expected Gol-PTA funding. As a result, the government is now exploring alternative external financing options to keep these projects on track.
A shortage of skilled technical personnel is another major constraint, limiting the pace of implementation across multiple projects. At the same time, rising fuel prices and increasing costs of construction materials—linked to global economic developments, particularly in West Asia—are putting additional pressure on project budgets and timelines.
Officials warn that without timely intervention, these combined challenges could significantly affect the delivery of key infrastructure outcomes under the 13th FYP. The MoIT and the Ministry of Finance are expected to jointly review the situation, focusing on budget reallocation, prioritization of critical projects, and identification of new financing avenues.
Nidup Lhamo, Thimphu
