Announcement of Nine Million Dollars Credit will nearly Treble Rice Production by Four Thousand and Five Hundred Nepalese Small Farm Families on July 8, 1976

•World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. • Telephone: (202) 393-6360 IDA NEWS RELEASE NO. 77/4 July 8, 1976 $9 MILLION CREDIT WILL NEARLY TREBLE RICE PRODUCTION BY 4,500 NEPALESE SMALL FARM FAMILIES About 4,500 Nepalese small farm families mostly 1 iving at subsistence level will benefit from a $9 million credit by the World Bank affiliate, the International Development Associa- tion (iDA), that wi 11 help realize the potential of the Terai Region of Southern Nepal for quick-yielding irrigated agriculture. It is the second irrigation project to be financed by IDA in the Terai. The Terai includes b~% of Nepal's cultivated land, and is underlain with ground water that can be quickly utilized for irrigation without requiring major hydraulic works. The proposed project will provide for the construction of 63 tubewells, each with a storage reservoir, and associated irrigation and drainage networks to enable year-round irrigation of 7,500 hectares (ha.) that currently provide only one crop a year during the monsoon season. The project wi 11 also include the construction and improvement of village roads, con- struction of transmission systems to electrify the wells, provision of additional grain ~ storage capacity, strengthening of the agricultural support services (particularly the extension service, agricultural inputs and the provision of agricultural production credit); a feasibility study for another tubewell project in adjacent areas and a study of irrigation water charges in Nepal. The project is expected to result in a substantial increase in foodgrain production, mainly rice and wheat; increased foreign exchange earnings; employment opportunities for the more than 22,000 inhabitants of the project area; and substantial increases in net farm income. At full development of the project in four years, it is estimated that production of paddy wi 11 increase from 8,700 tons at present to 25,000, wheat from 900 to 16,500 tons, pulses from 170 to 300 tons and oilseeds from So to 200 tons. New crops of maize and potatoes will add 400 and 2,500 tons respectively. Production of sugarcane will remain at 5,000 tons cultivated on 100 ha. instead of the present 200 ha. It is estimated that 3,400 tons of rice and 14,000 tons of wheat wi 11 be available for export, mainly to India, which borders the Terai project area, yielding about $1.7 million in net foreign exchange earnings. Average annual per capita income among the farming families is expected to increase from the current $37 to $140 before water charges. Nobody on farms of over 0.5 ha. will 1 ive below the subsistence level. Water from tubewells in the project area will be suitable for domestic use, and their development wi 11 help reduce gastrointestinal diseases caused by polluted water at present used by villagers. Further development in the Terai will be assisted by the demonstration effect of the ~project and its provision for institution-building and training. · The IDA credit is for 50 years, incvuding 10 years' grace, and is interest-free, with a 3/4 of 1% service charge for administrative costs. NOTE: Money figures are expressed in U.S. dollar equivalents. FORM NO. 1121 (5-76) T E CHN I CA L DAT A PROJECT: COUNTRY: TOTAL COST: Bhairawa-Lumbini Groundwater Kingdom of Nepal $ 13 • 7 mi 11 i on • I DA FI NANC ING : $9 mill ion , standard IDA terms OTHER FINANCING: His Majesty's Government of Nepal IMPLEMENTING ORGANIZATIONS: Department of Irrigation, Hydrology and Meteorology (DIHM) of the Ministry of Food, Agriculture and Irrigation; Nepal Electricity Corporation; Department of Agriculture; Agricultural Development Bank of Nepal; Agricultural Imports Corporation, all in Kathmandu, Nepal. PROJECT DESCRIPTION: The project will involve the construction of 63 tubewells to serve 7,500 hectares that are now limtted to the pro- duction of one crop per year under rainfed conditions during the monsoon season. The project will also include the construction of 11 kv transmission systems to electrify the wells; construction of feeder roads; provision of additional grain storage capacity; • strengthening of the agricultural supporting services (particularly the extension ser- vice); provis'on of agricultural inputs and production credit; completion of a feasibility study for another tubewell project in adjacent areas; and a study of water char~es in Nepal. PROCUREMENT: All equipment, vehicles and imported materials ($3.3 ~ill ion) through internationQl competitive bidding in accordance with I DA gu I de 1 i 1,es. CONSULTANTS: A consulting firm will be retained to: (a) to pr-0vide the pro- ject with technical assistance and advisory services in con- struction, procurement, general administration and operation and maintenance (180 man- months), and (b) to conduct feasibility studies for a further 15,000-20,000 ha ground- water irrigation project in adjacent areas of the Lumbini Terai, and a study of water charges and recommendations of their future levels (55 man-months). ECONOMIC RATE OF RETURN: ESTIMATED COMPLETION DATE: 19% December 31, 1980 - 0 - •