Announcement of Four Million Two Hundred Thousand Dollars Credit for Tourism in Nepal on March 16, 1972

• INTERNATIONAL DEVELOPMENT ASSOCIATION 1818 H STREET, N.W .. WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IDA Press Release No. 72/21 Subject: $4.2 million credit for March 16, 1972 tourism in Nepal A credit of $4.2 million from the International Development Association (IDA), an affiliate of the World Bank, will help Nepal to expand hotel accorrnnodation realizing important benefits from tourism for Nepal.· The project is expected to be completed in 1974. At full operation in 1978, the project will increase Nepal's foreign exchange earnings by $2.8 million a year, more than doubling the earnings from tourism in 1970. It will contribute directly to the creation of 500 new jobs. Increased tourist traffic will also stimulate employment in the handicraft and tour operating industries. Tourism represents Nepal's most promising avenue for increasing its foreign exchange earnings. With the Himalayas providing a beautiful backdrop, the country has many attractions for the foreign visitor. The climate is also ideal during nine months of the year. In the last few years tourist traffic in Nepal has been increasing at an impressive pace. Tourist arrivals have grown at the rate of about 37% a year since 1965, reaching • 46,000 in 1970. The growth is expected to continue. The availability of transportation and accommodation has not been adequate to meet growing demand. Projects to improve transport are being undertaken with assistance from bilateral and multilateral sources of finance including IDA. The IDA credit will supplement these efforts by increasing hotel accommodation. The credit will help to finance the addition of 271 hotel rooms in Kathmandu, the capital. The project consists of the expansion and modernization of the 90-room Hotel de l'Annapurna into a 241-room hotel and the construction of a new hotel -- the Yak and Yeti -- with 120 rooms. The two hotels are estimated to cost the equivalent of $6.0 million. The IDA credit will meet the foreign exchange costs. The beneficiaries, Hotel de l'Annapurna and the Yak and Yeti Hotel, will provide the balance of the costs. The Nepal Industrial Development Corporation (NIDC), a government agency established in 1959 to finance in- dustry and tourism, will finance interest during construction, amounting to about $600,000. The credit to the Kingdom of Nepal will be channeled to the hotels through the NIDC. NIDC will re-lend the proceeds of the credit for a term of 24 years, including 4 years grace, at a rate of interest of 7~. The IDA credit to the Government is for a period of 50 years with a 10 years grace period. It is interest free but carries a service charge of 3/4 of 1% to meet IDA's administrative expenses. • - 0 -  • March 16, 1972 TECHNICAL DATA PROJECT: Expansion of Hotel Accommodation COUNTRY: The Kingdom of Nepal BENEFICIARIES: Hotel de 1' Annapurna Pvt., Ltd. , and the Yak and Yeti Hotel Pvt., Ltd., Kathmandu, Nepal. TOTAL COST~ $6.0 million equivalent IDA FINAllCING: $4.2 million credit, 50 years, 10 years of grace, no interest, but a service charge of 3/4 of 1%. Proceeds of the credit will be channeled to the beneficiaries through the Nepal Indust'rial Development • Corporation (NIDC) at 7~% per annum for 24 years including 4 years of grace. OTHER FINANCING: Balance of cost being provided by the beneficiaries. NIDC will finance interest during construction. IMPLEMENTATION: The project will be carried out by the beneficiaries under the supervision of NIDC. PROJECT DESCRIPTION: Extending, modernizing and refurbushing the 90-room Hotel de l' Annapurna into a hotel having 241 rooms, and building a new hotel of 120 roo'iDS,to be called the Yak and Yeti Hotel. PROCUREMENT: Civil works and equipment supply contracts will be awarded on the basis of international competitive bidding. CONSULTANTS: None ESTIMATED COMPLETION DATE: Toward the end of 1974. - 0 - •