Announcement of Six Million Dollars Credit for Irrigation in Nepal on March 22, 1973

,.,,;.,'·" 1.0,.,.,~4> • INTERNATIONAL DEVELOPMENT ASSOCIATION (~) 1818 H STREET. N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IDA Press Release No. 73/14 Subject: $6.0 million credit for March 22, 1973 irrigation in Nepal Nepal's efforts to increase agricultural production and farm incomes will be assisted by a credit of $6e0 million from the International Development Association (IDA), an affiliate of the World Bank. The credit is the first from IDA for agricultural development in Nepal, a landlocked country with a per capita income of about $80. The credit to provide an integrated approach to agricultural development will finance the completion of construction of an irrigation project in the Narayan! Zone of • the Terai, near Birganj, and the introduction of improved irrigation·practices, agricultural extension and other elements of successful irrigated agriculture. The provision of perennial irrigation and modern agricultural inputs under the project will facilitate intensive and modern agriculture in some 78,000 acres, which are currently tmder rainfed subsistence farming. \ The $10 million project, when fully developed in 1980, will bring major benefits to the economy through increased production of foodgra:Lns, mainly rice and wheat. An increase in foodgrains output resulting from the project equivalent to $7 million a year, or more than double the present levels, is expected. This in turn will lead to increased agricultural income and employ- ment opporttmities for some 20,000 farm families in the area, the majority of whom are subsistence smallholders with incomes below the national average farm income. • Agriculture is the dominant sector of Nepal's economy, accounting for 70% of gross domes tic product and 80% of exports. It provides employment for ...... / IDA P.R. No. 73/14 -- Nepal -- irrigation ' - 2 - about 90% of the country's labor force. agricultural inputs. Agricultural development, however, i~ hampered by inadequate irrigation and drainage and the low level of modern Nepal's Fourth Five-Year Plan (1970-75) lays considerable • emphasis on the completion of on-going irrigation projects together with agricultural extension services and increased application of better seeds and fertilizers. The project being assisted by IDA is an important part of the Government's strategye The main elements of the project are the completion of the construction of a canal distributary system to irrigate 71,000 acres with water suppli.ed from a barrage on the Gat~dak River on the India-Nepal border and a main canal constructed by India and a tubewell irrigation scheme to cover about 7,000 acres in an adjoining area. It includes drainage, on-farm development, service roads, agricultural extension and research. The Government is arranging for cooperative services to provide agricultural inputs and credit to farmers. Feasibility studies will be undertaken for a small pumping scheme and a future irrigation project •. • The project will be executed by the Narayan! Zone Irrigation Development ~oard, an autonomous Government agency. It will be completed in 1978 at a total estimated cost of $10 million, including $4 million in foreign exchange. The IDA credit will finance the entire foreign exchange cost and part of the local currency expenditures. The IDA credit to the Kingdom of Nepal will be for a t.erm of 50 years, including a 10-year grace period. It will be interest-free, but a service charge 'of 3/4 of 1% will be made to meet IDA's administrative expenses. Today's credit brings the total of IDA commitments in Nepal to $14. 4 mil- lion. The Food and Agriculture Organization of the United Nations (FAO) joined IDA in identifying and preparing the project tmder the Bank/FAO Cooperative • Program. - 0 - • March 22, 1973 TECHNICAL DATA PROJECT: Irrigation COUNTRY: Nepal TOTAL COST: $10 .1 million IDA FINANCING: $6 .O million, 50 years• 10 years of grace, interest-free except for 3/4 of 1% service charge to meet IDA's administrative expenses. OTHER FINANCING: Government and participating farmers. IMPLEMENTING ORGANIZA7ION: Narayan! Zone Irrigation Development Board, • KathJtandu, Nepal • PROJEC.T DESCRIPTION: The purpose of the project is to provide canal irriga- tion facilities to a total area of 71,000 acres and tubewell irrigation to 7,000 acres. It will also provide drainage, on-farm development, service roads, agricultural extension and research services in the project area and for training, advisory services and feasibility studies of additional surface irrigation projects. PROCUREMENT: Equipment and vehicles will be procured, and civil works contracts awarded, after international competitive bidding. Civil works con;:ractors will be prequalif:f.ed. CONSULTAf..TTS: Consultants will be required to assist the Narayan! Zone Irrigation Development Board (NZIDB) in planning, designing and executing the project. They will also train and advise the NZIDB staff in carrying out these activities. About 40 man-years will be provided by the consultants, to be appointed on terms and conditions satisfactory to IDA. ESTIMATED COMPLETION DATE: 1978. - 0 - •