The municipality in the canton of Valais was counting on the Sherpas for the project, linked to the 150th anniversary next year of the first ascent of the 4,478-metre-high mountain.
The Nepalese were to start work on Tuesday to build walls along the trail to the Hornlihütte, a building at 3,260 metres used as a base for climbing the iconic peak.
Over a two-month period they were to upgrade the trail from the Schwarzesee, a lake at 2,552 metres, but the federal migration office has signalled its opposition.
The office recently informed Zermatt that the conditions for hiring the Sherpas had not been fulfilled, the NZZ am Sonntag newspaper reported.
The Nepalese did not receive work permits as required from the canton of Valais, the office ruled, the weekly newspaper said,
Visas for such work are only given if it provides training that cannot be obtained in the home country of the foreigners, which is not the case with the Sherpas, the office said.
Nepal, the country of origin of the Sherpas, should normally gain something from the work, as well, which is also not the case, according to the report.
The decision has frustrated the Zermatt municipal council.
“They would have taught us something, they would have been well paid, without taking away anybody’s work (from Switzerland) and they would have had a fascinating experience,” deputy mayor Romy Biner-Hauser told NZZ am Sonntag.
The municipality is all the more puzzled, because another federal agency, the Swiss Agency for Development and Cooperation (SDC), had backed the project.
Nepal is regarded as a “high priority” country for cooperation by Switzerland and SDC invested 38 million francs ($43 million) in the country last year.
Zermatt is now faced with trying to find a local company to do the work at short notice.
The municipality is seeking help from the canton of Valais to overcome the red tape.