Announcement of IDA Assists Implementation of Foodgrain Policy in Nepal on October 23, 1980

FOR IMMEDIATE ~ELEASE . . eWorldBank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 IDA NEWS RELEASE NO. 81/7 October 23, 1980 IDA ASS!STS IMPLEMENTATION OF FOODGRAIN POLICY IN NEPAL The International Development Association (IDA), the World Bank's affiliate for concessionary len~ing, has approved a credit of SDR 4.8 mill ion ($6.Z,mi llion) to assist the Government of Nepal in the implementation of its foodgrain policy, aimed at making foodgrains available tQ the poor in food deficit areas at reasonable prices as well as stabilizing prices, promoting exports, and increasing production by providing incentive prices to producers. Foodgrain production accounts for 90% of the total cropped area of Nepal and for 80% of the agricultural sector's value added. Rice, the main crop, has accounted for about 30% of the country's merchandise exports. To he 1p achieve the goa 1s of the policy, which is imp 1emen ted by the Nepal Food Corporation (NFC) and the Rice Export Companies (RECs), the project will consist of: • i) Construction of warehouses for storing 40,000 metric tons (MT) of bagged qr.ajn, comprising 37,000 MT storage capacity at eight procurement centers in the Terai (along the Indian border) and a 3,000 MT transshipment storage facility at Hetauda, an important transshipment center for distribution to the Kathmandu valley and other Hill areas; ii) Technical assistance for NFC in management and organization, and in finance and accounting, and for NFC and RECs in grain quality control and warehouse maintenance; iii) Training and study tours for NFC and RECs managers; iv) Studies on future needs for foodgrain storage and processing facilities and on foodgrain marke~ing and price policy. The project will thus provide good storage facilities and strengthen NFC and the RECs, so that they may be able to meet foodgrain procurement, distribution, and export requirements and reduce quantitative and qualitative storage losses. The project will also provide necessary information for further development of the storage, proces~ing and distribution sub-sector and for future government foodgrain marketing and price policy formulation. The IDA credit to Nepal is for 50 years, including 10 years of grace. It is interest free except for a 3/4 of 1% service charge to cover IDA's administrative costs . • NOTE: IDA credits are denominated in SDRs (Special Drawing Rights), which are valued on the basis of a 11 basket 11 of currencies. The U.S. dollar equivalent of the SDR amount of the IDA ~re~it reflects the exchange rates existing at the time of negotiation of the credit. FORM NO. 1121 (5-76} T E C H N I CAL DA T A PROJECT: COUNTRY: TOTAL COST: Grain Storage Nepal $8. 04 mi 11 ion • IDA FINANCING: SOR 4.8 million ($6.2 mil lion), standard IDA terms OTHER FINANCING: The Government will pass on $5.9 million out of the proceeds of the credit to NFC and finance $1.8 million of the local cost, including duties and taxes as equity contribution. NFC would contribute $0.04 million for land acquisition. IMPLEMENTING ORGANIZATION: Ministry of Food and Agriculture (MFA) Singha Durbar, Kathmandu, Nepal Nepal Food Corporation (NFC) Battishputali, Kathmandu, Nepal PROJECT DESCRIPTION: The project consists of: i) construction of 40,000 metric tons (MT) of bagged grain storage warehouses comprising 37,000 MT storage capacity at eight procurement centers in the Terai and a 3,000 MT trans- shipment storage facility at Hetauda; ii) technical assistance for NFC in management and organization, and in finance and accounting, and for NFC and RECs in grain quality co~l and warehouse maintenance;iii)training and study tours for NFC and RECs managers; and iv) studies on future needs for foodgrain storage and processing facilities and on food- grain marketing and price policy. PROCUREMENT: Civil works contracts for the construction of warehouses and ancillary facilities and for site improvements will be let on the basis of international competitive bidding in accordance with IDA guidelines. A 7.5% margin of preference will be given to eligible local civil works contractors. CONSULTANTS: About 130 man-months for assistance in engineering, manage- ment, and studies. ECONOMIC RATE OF RETURN: ESTIMATED COM ETION DATE: 18% 1983 - 0 - •