A Dialogue on “MoEAP Minister-Level Inter-Province Collaborative Initiative between Madhesh and Koshi Provinces” concluded

Itahari, Friday, 25 September 2026

Federalism and Localization Center (FLC) organized an event entitled “Inter-Provincial Prosperity and Cooperation: Koshi–Madhesh Shared Development Dialogue”,” on September 25, 2026 in Itahari. The event was organized with jointly by the Ministry of Economic Affairs and Planning of Koshi Province, with the participation of the Ministers for Economic Affairs of Koshi and Madhesh Provinces.

Seeking to transform geographical proximity and economic interdependence into meaningful cooperation, Koshi and Madhesh Provinces have identified the development of an industrial lifeline corridor, harmonization of tax systems, joint water-based tourism, and Chure and watershed conservation as key foundations for shared economic prosperity.

The issues of identifying shared opportunities and strengthening cooperation were discussed where the participants emphasized ways to unlock broader economic potential through joint investment and policy cooperation while ending unhealthy competition between the two provinces. The Economic Affairs Ministers of both provinces expressed their commitment to giving high priority to mutual cooperation and fiscal discipline and to developing common positions on resource mobilization.

Koshi Province Minister for Economic Affairs and Planning Bidur Kumar Lingthep pointed out that differences in tax rates between adjoining provinces have increased revenue leakage and confusion among citizens. He emphasized the need to immediately harmonize taxes, particularly vehicle-related taxes.

He also expressed commitment to developing religious and water-based tourism by operating jet boats from the Koshi Barrage to Chatara–Barahakshetra, jointly advocating for irrigation of 122,000 hectares of land in Madhesh through the Sunkoshi–Marin Diversion Project, and establishing a strong basis for the upcoming Inter-Provincial Chief Ministers’ Conference.

Madhesh Province Finance Minister Yubraj Bhattarai emphasized that provinces must eliminate the disorder associated with fragmented projects and works implemented through consumer committees in order to demonstrate the relevance and effectiveness of federalism. He stated that the Madhesh Government has adopted a policy of not allocating budgets to small-scale projects costing less than NPR 10 million and of making the tendering process mandatory. He also called for an end to unhealthy competition among provinces in offering exemptions on vehicle taxes.

He argued for establishing an automated system under which vehicle tax revenue would accrue to the province where the vehicle is registered, regardless of where it is renewed. He also emphasized that provincial budgets should be concentrated on large-scale infrastructure and that the provinces should undertake joint initiatives toward this objective.

During the discussion, the working papers presented at the event featured an extensive debate on “Five Strategic Pillars” of economic cooperation. These included:

1. An industrial lifeline corridor connecting the industrial centers of Biratnagar–Itahari–Dharan with Janakpur–Bardibas–Birgunj; 
2. Joint cold-storage facilities and logistics hubs in border areas; 
3. Common standards for the extraction of stones, gravel and sand; 
4. Establishment of an “Inter-Provincial Joint Climate Fund” for Chure conservation and flood control in the Koshi Basin; and 
5. Development of an integrated tourism corridor linking Janaki Temple, Chhinnamasta and Barahakshetra with Ilam and Kanchenjunga, envisioned as a “Himal–Hill–Terai–Mithila Tourism Circuit.” 

The proposed Himal–Pahad–Tarai–Mithila Tourism Circuit was highlighted as an initiative that should receive particular priority.

The Vice-Chairpersons of the two Provincial Planning Commissions emphasized the need to provide legal and institutional foundations for cooperation. Raj Kumar Singh, Vice-Chairperson of the Madhesh Province Policy and Planning Commission, said that the two provinces should jointly lobby the federal government to transform the existing value-added tax system into a goods and services tax and secure a 50 percent share for the provinces. He also demanded that remittances and electricity transmission lines be considered as factors in determining the revenue-sharing formula.

Tara Nath Niraula, Vice-Chairperson of the Koshi Province Planning Commission, said that Koshi is preparing a 20-year long-term development roadmap and an export promotion strategy, while emphasizing the need to assess the returns from past investments.

He also stated that the “Zero Draft” prepared for the Inter-Provincial Chief Ministers’ Conference scheduled for 8–9 October 2026 (22–23 Ashoj 2083) includes agendas related to the transfer of powers and inter-provincial partnerships, and expressed expectations for concrete suggestions from Madhesh Province.

During the programme, secretaries of the Ministries of Economic Affairs, financial comptrollers, and experts suggested that the two provinces should conduct pre-budget consultations three months before presenting their annual budgets, fully implement project banks, and undertake joint studies and research based on a 50–50 percent cost-sharing arrangement.

The dialogue also reached an agreement to establish a high-level steering committee led by the Economic Affairs Ministers of the two provinces and a technical task force led by the respective provincial secretaries to guide and institutionalize the cooperation process.