World Bank Document · anteCY MEQUIVALENTS-US$1.00 -Nepalese Rupees (NRs) 10.125 NRs 1.00 m US$0.0988 NRs 1 million - US$98,765 WEIGHTS AND MEASURES (METRIC SYSTEM) 1 hectare (ha)

DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENTTNTlPRNTIONAL DEVELOPMENT ASSOCIATION

Not For PubLic Use

Reort No. PA-146a

APPRAISAL OF

BIRGANJ IRRIGATION PROJECT

(NARAYANI ZONE)

NEPAL

March 1, 1973

Agriculture DivisionASIA PROJECTS DEPARTMENT

This report was prepared for official use only by the Bank Group. It mnay not be published, quotedor cited without Bank Group authorization. The Bank Group does not accept responsibility for theaccuracy or completeness of the report.

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anteCY MEQUIVALENTS-

US$1.00 - Nepalese Rupees (NRs) 10.125NRs 1.00 m US$0.0988NRs 1 million - US$98,765

WEIGHTS AND MEASURES (METRIC SYSTEM)

1 hectare (ha) n 2.47 ucres (ac)1 kilometer (km) - 0.62 miles (mi)1 meter (m) - 3.28 feet (ft)1 cubic meter (m3) - 1.31 cubic yards or 35.31 cu ft1 million m3 (Mm3 ) = 810 acre feet (ac-ft)1 m3/sec - 35.31 cubic feet per second (cfs)1 liter/sec - 0.035 cfs

ABBREVIATIONS

ADBN - Agricultural Development Bank of NepalAmC - Agricultural Marketing CorporationGOI - Government of IndiaEHGN - His Majesty's Government of NepalNZIDB- Narayani Zone Irrigation Development Board0 & N- Operation and MaintenanceUNDP - United Nations Development ProgramUSAID- United States Agency for International Development

FISCAL YEAR

July 16 to July 15

1/ Excha*ge rate in force on February 19, 1973.

NEPAL

APPRAISAL OFBIRGANJ IRRIGATION PROJECT

(NARAYANI ZONE)

TABLE OF CONTENTS

Page No.

SUMIARY AND CONCLUSIONS ......... ............. i-ii

I. INTRODUCTION ......................................... 1General. 1Gandak Irrigation and Power Project Agreement ... 1

II. BACKGROUND. 2General. 2Agriculture. 2Irrigation and Drainage. 3Fourth Five-Year Plan for Agriculture. 3

III. TIE PROJECT AREA. 4Location. 4Climate. 4Topography and Soils. 4Crop Production and Yields ....................... 4Existing Irrigation Facilities. 5Farm Size and Land Tenure. 5Agricultural Support Program. 6Credit, Marketing and Storage. 6Transportation. 7

IV. THE PROJECT... 7A. General Description . . 7B. Detailed Features ....................... 7

The Project Works. . 7On-Farm Development. . 9Status of Engineering. 9Consulting Services. . 9Water Supply and Demand . .10Construction Schedule . .11

C. Cost Estimates . .11D. Financing . .12

Financing Plan . .12Procurement and Contracts . .12Disbursement . .13Accounts and Audit . .13

This report was prepared by Messrs. K. Pranich, D. D. Brown, M. Burer,H. R. McDonald, T. H. Yoon (IDA), and M. Cassam (FAO/IBRD CooperativeProgram).

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Page No.

V. ORGANIZATION AND MANAGEMENT ........................... 13Project Organization ............................. 13Monitoring of Benefits ........................... 15Operation and Maintenance ........................ 15Recovery of Costs ................................ 15

VI. PRODUCTION, MARKET PROSPECTS, PRICES AND FARM INCOME .. 16Production ................... .................... 16Market Prospects .............. .. ................. 16Prices ..................... ...................... 17Farm Income ................... .................... 17

VII. BENEFITS AND JUSTIFICATION ............................ 17Economic Benefits ................................ 17Ecology and Environment .......................... 19

VIII. AGREEMENTS REACHED AND RECOMMENDATIONS .... ............ 19

ANNEXES

1. Agreement between His Majesty's Government of Nepal and theGovernment of India on the Gandak Irrigation and Power Project

2. Climatic Data

3. Agriculture

4. Agricultural Support Services

5. Description of Project Works

6. Irrigation Water Demand and Supply

7. Construction Schedule

8. Detailed Cost Estimates and Expenditure Schedule

9. Estimated Schedule of Disbursement

10. List of Equipment

11. Project Organization and Consultants

12. Irrigation, Electricity and Related Water Resources Act, 1967

13. Farm Incomes

14. Economic Rate of Return and Sensitivity Analysis

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CHART: Organization Chart

World Bank - 6877 (R)

MAPS

IBRD 3895 Project LocationIBRD 3896 General Plan

NEPAL


(NARAYANI ZONE) 1/

SUMMARY AND CONCLUSIONS

i. Agriculture accounts for about 70% of Nepal's GDP and 80% ofexport earnings, and provides employment for about 90% of the labor force.Total cultivated land has been estimated at 1.8 million ha, or about 13%of the country's total area. Most of the cultivated area is used to producefoodgrains with more than 50% being utilized for the production of paddy.Foodgrains are grown mainly during the monsoon season (June to September)and because the timing and amount of rainfall are erratic, crop damage fromdrought and floods is common. Second crops are grown on only about 33% ofthe cultivated land, but yields are very low. Irrigation is of increasingimportance in Nepal's agriculture. By 1970, the Government had providedirrigation facilities for about 120,000 ha. However, these facilities aredesigned primarily to provide supplementary water to the wet season ricecrop, and double cropping on irrigated land is therefore very limited. TheGovernment has recognized for some time the need for irrigation schemesdesigned for double cropping, and several such projects are in the planningstage, including the Birganj Irrigation Project. This would be the firstagriculture project to be financed by IDA in Nepal.

ii. The project would complete the construction of a canal distribu-tary system to irrigate 28,700 ha with water supplied from a barrage on theGandak River on the India-Nepal border and a main canal constructed by theGovernment of India (GOI), and a tubewell irrigation scheme to irrigate anet area of 2,700 ha in an adjoining area. It includes drainage, on-farmdevelopment, service roads, agricultural extension, research and cooperativeservices to provide inputs and credit to farmers, providing an integratedapproach to the agricultural development of the project area. In additionit would also provide for the preparation of feasibility studies for asmall pumping scheme and a surface irrigation project. The project would beexecuted by the Narayani Zone Irrigation Development Board (NZIDB) recentlyestablished as an autonomous government agency, having jurisdiction over anarea encompassing five administrative districts. The staff of NZIDB wouldbe trained by a consultant team in the planning, design, construction, opera-tion, maintenance and management of both the surface and groundwater irri-gation systems as well as in agricultural development. Since NZIDB isa new agency, drawing its key staff from several ministries, its successin implementing and managing the project would depend on strong supporti:rom HMGN as well as on the assistance and training of NZIDB staff by theconsultants.

1/ Throughout this report referred to by its short title of "BirganjIrrigation Project".

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iii. The estimated cost of the project is NRs 102 million (US$10.1 mil-lion), comprising land acquisition NRs 11 million, civil works NRs 30 million,equipment and spares NRs 7 million, consultants NRs 20 million, administra-tion and contingencies NRs 24 million and on-farm development works by farm-ers NRs 10 million. The estimated foreign exchange cost is US$4 million andthe remaining US$6.1 million equivalent would be local costs. All contractsfor civil works and equipment would be awarded after international competi-tive bidding. The project would take 5 years to complete.

iv. The major benefit from the project would be the substantialincrease in foodgrain production in the project area, mainly rice andwheat, which would lead to an increased agricultural income and employmentopportunities for some 20,000 farm families. The primary beneficiarieswould include the majority of the project area population who are subsistencesmallholders with current incomes significantly below the national averagefarm income. At full development of the project, the annual gross value ofproject agricultural output is expected to increase from the current NRs 47million to NRs 122 million, more than doubling the projected output withoutthe project (NRs 51 million). The economic rate of return of the projectwould be about 21% if sunk costs which consist of the GOI's expenditurestoward this project are disregarded; or 14%, if the sunk costs withoutinterest are included in the first year. The economic rate of return forthe tubewell scheme alone, which has been included in order to expand anexisting pilot tubewell project and to develop institutional capacity forconstruction and management of future tubewell irrigation projects, wouldbe about 14%. Other intangible but important benefits include the demons-tration effects of the project, institution-building and training whichwould set an example for, and contribute to, agricultural development inNepal.

v. Though the economic rate of return of the project is somewhatsensitive to changes in investment costs and reduction in benefits, theeconomic viability of the project is secure, within reasonable ranges ofvariation in benefit and cost variables. A 20% increase in investment costsreduces the rate to 18% while a 20% reduction in benefits would lower it to17%. Even with an extremely pessimistic combination of a 20% increase ininvestment costs and a 20% reduction in benefits, together with a 2-yeardelay in project completion, the rate of return would still be 14%.

vi. The project is suitable for an IDA credit of US$6.0 millionequivalent which is about 59% of the project costs. This amount wouldfinance the foreign exchange costs of the project and 33% of total localcosts equivalent to 50% of the local costs excluding land acquisition andon-farm development works to be carried out by farmers. The borrower wouldbe the Kingdom of Nepal.

NEPAL


(NARAYANI ZONE)

I. INTRODUCTION

1.01 General. His Majesty's Government of Nepal (HMGN) has requestedthe International Development Association (IDA) to help finance irrigationdevelopment in the foothill plain (Terai) in Eastern Nepal. The projectwould complete the construction of the Birganj Irrigation Project, a surfacesystem to irrigate 28,700 ha in Nepal with water supplied from a barrage on

the Gandak River and main canals constructed by the Government of India (GOI).It would also include the rehabilitation and installation of tubewells toirrigate 2,700 ha from groundwater sources, engagement of consultants toassist in project implementation and to prepare feasibility studies for asmall pumping scheme and a surface irrigation project.

1.02 The feasibility report of this project, which is to be Nepal'sfirst IDA-assisted project in the agricultural sector, was prepared by con-sulting engineers (Nippon-Koei, Japan) under the UNDP/FAO NEP-7 study withassistance from the FAO/IBRD Cooperative Program. This appraisal reportis based on the feasibility study and the findings of an appraisal missionconsisting of Messrs. K. Pranich, D. D. Brown, M. Burer, H. R. McDonald(IDA), and M. Cassam (FAO/IBRD Cooperative Program) which visited Nepalduring November and December 1971. This report was prepared by the missionassisted by Mr. T. H. Yoon.

1.03 Gandak Irrigation and Power Project Agreement. An agreementbetween HMGN and GOI, signed in 1959, provides for the execution of theGandak Irrigation and Power Project (Annex 1). Under the agreement, GOI hasundertaken to finance and construct a barrage on the Gandak River, whichoriginates in Nepal, and irrigation systems on the left and right banks ofthe river, down to secondary canals of 0.57 m3/sec (20 cusec), commandinga total area of about 1.2 million ha in India and about 60,000 ha in Nepal.There will also be a small hydro-electric power station on the Nepal WesternCanal which is one of the two main canals on the right bank. Constructionof the distributary system below 0.57 m3/sec is the responsibility of HMGNwith India contributing 1.5 million Indian Rs (US$200,000). On the leftbank, the Don Branch Canal, which is one of the three main canals, wouldconvey water to irrigate farm lands in India and Nepal. After running for92 km in India till it reaches the India-Nepal border, the canal bifurcatesinto the Nepal Eastern Canal, which is the main canal of this proposedproject, and the Ghora Sahan Branch Canal in India (Map IBRD 3895). Thepresent project would complete the development of the command area of theNepal Eastern Canal extending from the border to the Arwa River in Nepal.

1.04 GOI has completed most of its work on the first 26 km of the NepalEastern Canal and is expected to complete all works on the whole 62 km to theArwa River by March 1, 1973. In order to provide efficient water controlfor year-round irrigation, additional control structures and modifications

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to some existing structures would have to be made on the main and secondarycanals. Additional secondary canals, all tertiary canals and drainagenetworks would be provided under the proposed project.

II. BACKGROUND

2.01 General. Nepal is a land-locked country of 141,000 km2 nestlingon the Himalayan mountain range between India and China. The population,currently estimated at 11.2 million, is growing at an annual rate of 2.2%.About 10% of the people live in the Himalayan region, 60% in the hills and30% in the foothill plain (Terai). In 1971 per capita GDP was estimated atUS$70-80. Prior to 1951, Nepal was relatively isolated from the outsideworld. The Government's effort towards economic development was intensifiedin 1957 with the launching of the First Five-Year Plan.

2.02 Agriculture. The Nepalese economy is predominantly agricultural.This sector accounts for about 70% of the GDP and 80% of exports, and pro-vides employment for 90% of the labor force. Farming, in general, is ofa subsistence nature with much of the land under foodgrain production.

2.03 About 1.8 million ha or 13% of the total area is under cultivationwith about 2.4 million ha of crops grown each year. Practically all thecultivated land is under seasonal crop production; paddy covers more thanhalf of the area. Other main crops are maize, wheat, millet, potatoes,oilseeds, pulses, jute, sugarcane and tobacco. Tea and seed potatoes inthe east and horticulture in the west are of local importance.

2.04 Apart from jute, which accounts for about 70% of exports tocountries other than India, almost all agricultural exports are sold toIndia, which is Nepal's major trading partner. Commercial relations betweenthe two countries are governed by a trade and transit treaty.

2.05 During the 1960's an Intensive Agricultural Development Programwas established in 16 of the 75 districts, where land and other resourceswere considered to be promising for crop production. Efforts were made toenlarge the irrigated areas, to introduce better crop varieties and amore intensive use of fertilizers and plant protection. A less intensiveprogram was also initiated in other districts. Roads constructed in theeastern and central Terai with connections to Kathmandu, Pokhara, Bhairawaand the People's Republic of China have improved market opportunities forfarmers.

2.06 The Agricultural Marketing Corporation (AMC) supplies inputs tofarmers and regulates the marketing of farm produce. Other vital organiza-tions for increasing agricultural production include the Agricultural Devel-opment Bank of Nepal (ADBN), which is the only institutional source ofagricultural credit in the country, and the Agriculture Department whichtakes care of extension, training, research, horticulture and fishery,livestock and veterinary services. In 1970/71, the ADBN had NRs 23 million

share capital and NRs 12 million from borrowings, deposits and reserves, inaddition to a loan of US$2.4 million granted by the Asian Development Bankfor the procurement of tractors and pump sets for sale to farmers on credit.The procedures for obtaining a loan from ADBN are cumbersome and time-consuming and there is a lack of contact between the borrower and the loanofficer. The Agricultural Extension Service is weak primarily because ofthe inexperience of the staff. Agricultural research has only just begunand its impact is still meager.

2.07 In spite of all the efforts during the 1960's to increase foodproduction, agricultural growth has been disappointing. During the ThirdPlan period (1965/66 to 1969/70), the sector's growth rate was estimatedat only 1.8% per annum, compared with the estimated 3.8% of the non-agri-cultural sector. The major development constraints include insufficientirrigation and drainage facilities, low level of modern agricultural inputsapplication (particularly fertilizers), inadequate supporting agriculturalservices, and most importantly, the shortage of trained manpower.

2.08 Irrigation and Drainage. Though rainfall in Nepal is substantial,it is unreliable and unevenly distributed with heavy concentration duringthe monsoon season. Irrigation is essential for reliable crop productionbut the total irrigated area is currently only 120,000 ha or about 7% of thetotal cultivated land. Existing irrigation works can supply water onlyduring the wet season and drainage is inadequate.

2.09 Irrigation and drainage works are the responsibility of theDepartment of Irrigation, Hydrology and Meteorology of the Ministry of Food,Agriculture and Irrigation. Planning, design, administration and budgetcontrol of irrigation and drainage works are centralized in Kathmandu.Generally minor construction works are carried out by force account whilemajor works are executed by contractors. Operation and maintenance ofirrigation projects are the responsibility of district irrigation engineersposted by the Department in the district or project areas.

2.10 Fourth Five-Year Plan for Agriculture. Nepal is now in itsFourth Five-Year Economic Development Plan (1970/71-1974/75). The totalexpenditure for the Plan period is US$257 million, of which 26% wouldbe for agriculture. The annual growth target of the Plan is 4% in realGDP and 3% in agriculture. The Plan stresses continued expansion of food-grain and livestock production and places additional emphasis on cropdiversification, increase in cash and industrial crop production as wellas improvement of marketing and storage facilities.

2.11 To achieve the above targets, HMGN is strengthening its activitiesdealing with research, education, extension, the distribution of farm inputsand agricultural credit. Applied research on higher yielding crop varietiesand the use of inputs has been increased. The Intensive Agricultural Devel-opment Program which formerly covered only 16 districts has been extendedto include a total of 28 districts. Funding of the AMC and the ADBN hasbeen increased and additional local service branches have been establishedand provided with trained staff. However, judging from past performance

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and in view of the shortages in trained and experienced personnel the annualgrowth target of the Plan may be too optimistic.

2.12 In the irrigation sub-sector, the Plan calls for continuationof work on eight major projects started during the 1960's, the initiationof four new major projects and the construction of minor works and tubewells,totalling an additional 184,000 lha. However, because of shortage of keystaff for planning, design and construction, not more than 50-60,000 ha areexpected to be completed by the end of the Plan period.

III. THE PROJECT AREA

3.01 Location. The project is located in the Bara and Parsa districtsof the Narayani Zone in the Central Terai at an altitude of about 80 m.Birganj is the largest town (population 60,000) situated in the projectarea. The project area to be irrigated with surface water adjoins the Indianborder; the groundwater area is immediately to the north of it. TheKathmandu-Birganj highway bisects the project area and connects with theNepal east-west highway, which is about 10 km to the north, and with Raxaul,an Indian town at the border, to the south. A narrow-gauge railway lineconnects Birganj to Raxaul and the Indian railway system (Map IBRD 3895).

3.02 Climate. The project area has two distinct seasons, the wetseason from late May to early October and the dry season. Annual rainfallis about 1,350 mm, with over 90% falling in the wet season but with erraticdistribution (Annex 2). About two years in ten it is less than 1,000 mm ormore than 1,600 mm, with crop damage to rainfed crops in either case. Tem-peratures range from a low of 8°C in January to a high of 38°C in April andiMay. Humidity is 65% to 70% from March to May and ranges between 75% to 85%for the remainder of the year.

3.03 Topogra2hy and Soils. The project area is located on a large,fertile, undulating alluvial plain adjoining the Nepal/India border and isintersected and drained by several rivers and streams originating in thenorthern hills. The land slope ranges from 1:750 to 1:1000 from north tosouth. Soils are alluvial and generally medium to fine textured rangingfrom silty sand to clay loam. They are nonsaline and of satisfactory fer-tility, suitable for growing a wide variety of crops. Crops respond wellto fertilizers on these soils. By United States Bureau of Reclamationstandards about 90% of the area would classify as Class II or III for irri-gation (Annex 3). With drainage and some land-shaping where appropriate,the area is suitable for irrigated farming.

3.04 Crop Production and Yields. Climatic conditions favor the cultiva-tion of a wide range of crops. However, heavy rainfall in July and August,cloud covers in the rainy season and low winter temperatures affect yieldsand hamper harvest operations, in particular of rainfed crops. Rice grownin the wet season is the main crop. Dwarf wheat, introduced about fiveyears ago, is the major dry season crop. Sugarcane is grown on about 5%

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of the area, mostly near the Birganj sugar factory in the Tilawe and Sirsiairrigated areas (para 3.06). Dry season vegetables, pulses and oilseeds(mustard) are cultivated on a limited scale. Even more limited is the cul-tivation of Marijuana or "Ganja", which is grown in small plots (1/20 to1/10 ha), totalling no more than 100 ha, scattered over the project area.

Production is licensed by the Government (see para 7.09 and Annex 3). Thoughthis is a highly profitable crop, its growing involves high investment, know-

how, high risk of failure and substantial labor inputs.

3.05 The present average yield of 1,500 kg/ha paddy is about the sameas in the adjoining districts in India. Yields of wheat, 1,000 kg/ha; sugar-

cane, 15 ton/ha; oilseeds, 400 kg/ha; pulses, 500 kg/ha; and vegetables,5,500 kg/ha are low due to inadequate rainfall during the dry season and the

low level of agricultural technique of farmers. The overall annual cropping

intensity is about 135%.

3.06 Existing Irrigation Facilities. The Tilawe and Sirsia IrrigationProjects, constructed some ten years ago, provide mainly supplementaryirrigation during the wet season, to about 7,000 ha of the project area(Blocks 5, 6 and 7, Map IBRD 3896). HMGN built only the main and secondarycanals; construction of the tertiaries, on-farm watercourses and landlevelling was left to the farmers who generally have so far failed to im-

plement these works. The systems also suffer from inadequate drainage facili-

ties.

3.07 The groundwater potential in the area north of the Nepal EasternCanal is substantial. Under the Indian aid program, a pilot project con-

sisting of 21 public tubewells was constructed between 1968 and 1970, but7 of these wells are considered unusable either because they pump sand orbecause of their low yields and distance from power supplies. The 14usable wells are poorly equipped with unsuitable pumps and motors.

3.08 Farm Size and Land Tenure. A farm survey of four villages in theproject area held in 1968-1969 and district statistics give the roughindication of farm sizes shown in the table below:

Farm Size Farm Holdings Cultivated Area(ha) (No.) (%) (ha) tZ)

Less than 0.15 2,500 8 260 10.15 - 0.5 9,400 31 2,980 10

0.5 - 1.0 7,500 25 5,380 17

1.0 - 3.0 9,000 30 15,130 48

Over 3.0 1,600 6 7,650 24

30,000 100 31,400 100

3.09 Many families in the area have more than one holding and the

number of farm families is estimated to be around 20,000. About 75% oft:he families are owner-cultivators while the remainder are tenants. Dueto the caste system, heavy field work, such as land preparation, is often

carried out by hired labor even on some of the smallholdings. Farm owners

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and tenants live in about 200 villages and hamlets scattered throughout thearea. Transient labor from India is also used to some extent to transplant,weed and harvest paddy and sugarcane. Most of the land preparation isperformed with bullocks, though for larger farms tractors may be employed.There are about 125 farm tractors in the project area.

3.10 Agricultural Support Program. There is only one extension workerfor every 2,000 farm households, and the extension effort itself is weakbecause of inadequate training and incentives offered to the workers andthe lack of transportation. Adaptive research is carried out at theParwanipur Research Station near the project area. The work has beenmainly on planting and fertilizer trials, and has only been recently expandedto include plant breeding. Almost all the attention has been on paddy andwheat, with little on maize and oilseeds. The station also has trainingcourses for extension staff posted locally (Annex 4). UNDP and USAID haveprovided consultants and financial support to the station and these wouldcontinue to 1974/75.

3.11 AMC provides fertilizers, seeds, plant protection chemicals, toolsand pumps to farmers in addition to services on marketing of farm produce.At present, demand from farmers for inputs is low: in 1970, the total fer-tilizer demand for the whole country was only 4,600 tons and the demand forother inputs was negligible. Hence, present demand is easily handled byAMC which has a branch in Birganj and a distribution network of 22 privateand 6 cooperative retailers.

3.12 Credit, Marketing and Storage. ADBN has a branch in Birganj.During 1970-71, only about NRs 4.0 million was lent at an interest rateof about 10%. Current lending procedures are cumbersome and ADBN isreorganizing its activities to streamline the work. Aside from stafftraining as part of the reorganization effort, branch managers would begiven greater autonomy in lending operations and the 43 cooperatives inthe project area would be merged into a few viable units under ADBN manage-ment (Annex 4).

3.13 Marketing channels are well developed; millers in Birganj, Kalaiyaand neighboring Indian towns have a network of agents penetrating into thevillages. All grain surplus above family requirements moves directly tothese millers, who process paddy, wheat and oilseeds in their mills. Sugar-cane is sold to the mill in Birganj. Most of the pulses and vegetables areconsumed in the villages.

3.14 Over 75% of the marketed paddy and wheat is exported to India.Indian price and procurement policies, which attempt to minimize seasonalprice fluctuation, govern the prices in Nepal and encourage farmers to storeonly what is needed for local consumption. Grains stored in the village maylose considerable volume and quality because of high moisture, rodents, in-sects, birds and pilferage.

3.15 Transportation. In addition to the main roads (para 3.01) about25 km of improved dirt roads and considerable length of bullock cart trailsprovide transport routes from the villages to Birganj and nearby Indiantowns. The east-west layout of the project area, intersected by ten majorrivulets, makes it difficult for distant farmers to deliver their produceto the Birganj market, hence these farmers currently prefer selling theirproducts to nearby Indian towns. Farmers use bullock carts to transporttheir produce and trucks also use these roads and trails during the dryseason. Imported goods usually move from the Indian port of Calcutta toRaxaul by rail or truck and by truck to the Nepal destination. Exportsmove by bullock cart or truck at many points across the border to Indianmarkets.

IV. THE PROJECT

A. General Description

4.01 The project would complete the canal distributary network of theBirganj surface-water irrigation project with a net area of 28,700 ha andprovide tubewell irrigation to 2,700 ha in an adjoining area. It includesdrainage, on-farm development, office buildings, project staff quarters,cooperative stores, service roads, procurement of vehicles and equipment,agriculture extension and cooperative services to provide integrated agri-cultural development. It also includes provisions for the preparation offeasibility studies for a small-pumping scheme and a surface irrigationproject. The project would be executed by the Narayani Irrigation Develop-ment Board (NZIDB) recently established for the purpose as an autonomousGovernment agency, assisted by consultants (see para 5.01).

B. Detailed Features

4.02 The Project Works. Project works, details of which are given inAnnex 5, would include:

(a) Surface-water Irrigation

(i) Improvement of the Nepal Eastern Canal including theconstruction of additional control structures and theimprovement of existing structures.

(ii) Improvement of about 50 km of secondary canals above0.57 m3/sec (20 cusec) including the addition of controlstructures.

(iii) Construction of about 1,150 km of secondary and ter-tiary canals with control structures and fieldturnouts.

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(iv) Construction of about 800 km of drainage networks.

(v) Construction of about 290 km of canal service roadsand surfacing of about 110 km of these roads to linkproject area with Kathmandu-Birganj road and withcooperative stores.

(b) Groundwater Irrigation

(i) Testing of existing tubewells and replacement ofinadequate pumps, motors and control devices.

(ii) Drilling and equipping of about 14 new tubewells.

(iii) Construction of about 18 km of 11 kV transmissionlines to serve existing and new tubewells.

(iv) Construction of related storage tanks and irrigationdistribution systems, consisting of lined main canalsand unlined secondary canals to the turnouts commanding30-40 ha service unit each, and drainage networks in thecommand of each tubewell.

(c) Project Facilities

(i) Construction of offices, workshops, stores and livingquarters for staff and consultants.

(ii) Installation of a communications system for irrigationsystem operations.

(iii) Installation of hydrological telemetry equipment forthe Nepal Eastern Canal.

(iv) Construction of about 12 cooperative stores.

(d) Technical Assistance. A consulting firm would be retained toprovide the project with training, technical assistance andadvisory services in engineering, construction, generaladministration, personnel finance, accounting and auditing,agricultural extension and cooperative services and in theoperation and management of the project as an integratedagricultural project. Farmers in the project area would beprovided technical assistance for the planning, design andexecution of on-farm watercourses, field drains and otheron-farm development works.

(e) Feasibility Studies. Feasibility studies would be provided for:

(l) A pumping scheme to lift water from the Nepal EasternCanal to irrigate areas north of the said Canal.

(ii) A further irrigation project to be selected.

4.03 On-Farm Development. Because of the heavy wet-season rainfall andundulating topography, it would be necessary to construct a comprehensiveon-farm irrigation and drainage system, and carry out landshaping in someareas, if the projected crop yields are to be obtained. The project wouldprovide technical assistance to plan, design, and lay out on-farm watercoursesand field drains and to indicate areas requiring landshaping. The projectwould also organize farmers to complete construction of these works them-selves. Because holdings in the project area are small, most of the farmerswould be able to carry out the works with their own labor. Farmers withholdings larger than 3 ha who are not able to undertake the work with theirown labor may hire NZIDB to carry out the work for them. The ADBN wouldprovide credit to these farmers to help finance the works. ADBN generallylends to cooperatives at 7% interest and cooperatives on-lend to farmer-members at 10% interest. Assurances were obtained during negotiations thatunder the project farmers would receive irrigation only after they havecompleted all on-farm development works on their lands. Should a farmerfail to complete the construction of the watercourses, field drains andland-shaping as indicated in the plan within one year after constructionof the tertiary canal and drain serving his area, NZIDB would perform suchconstruction and recover the expenses from the landowners. Assurances werealso obtained that NZIDB would have these rights included in the order es-tablishing the Board.

4.04 Status of Engineering. The status of works carried out by GOIin the project area at the end of June, 1972 was as follows:

(a) From km 0 to km 26.5 of the Nepal Eastern Canal atKathmandu-Birganj Road, the excavation of the canal wasnearly completed except for short distances at km 6.7,11.3, 25.9 and 26.4 where there were problems of landacquisition and farmers' demand for additional canalbridges. Of the 44 structures, 40 were completed andthe remainder are expected to be completed by March, 1973.Three out of five secondary canals larger than 0.57 m3/sec(20 cusec) were completed and the other two are expectedto be completed by March, 1973.

(b) From km 26.5 to the end of the canal at Arwa River -km 62, the excavation of the canal was nearly completedexcept for small interruptions (10-15 m length) due tofarmers' demand for bridges at km 27-28 (5 interruptions),31.1, 37.5, 37.8, 39 and 43.9. Of the 47 structures onthe canal, 26 were completed and 21 were under construction.Of the four secondaries above 0.57 m3/sec, two were com-pleted and two were under construction. HMGN expected thatGOI's remaining works on this portion of the project areawould also be completed by March, 1973.

4.05 Consulting Services. UNDP financed a bridging operation extendingfrom November 1971 to July 197 for the consulting engineers (Nippon Koei,Japan) to prepare design drawings, specifications and tender documents for

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Block 1 of the surface-water irrigation area (Map IBRD 3896). Hence as soonas the land required for civil works in this block has been acquired (para4.17), invitations to bid could be issued.

4.06 Since there is a shortage of trained and experienced engineers,agriculturists and managers in Nepal, consultants would be required toassist NZIDB in the planning, design and supervision of construction of theproject and to carry out feasibility studies (para 4.02). They would alsotrain and advise NZIDB staff in all phases of project execution, management,accounting, agricultural development and extension activities. About 40man-years of consultants would be provided under the project inclusive of6 man-years for feasibility studies. Assurances were obtained duringnegotiations that HMGN would retain consultants acceptable to, and appointedon terms and conditions satisfactory to, the Association, and that within12 months from the effective date of the credit HMGN would provide the Asso-ciation with a plan for staff training to be carried out by the consultants.

4.07 Water Supply and Demand. Nepal's agreement with India (Annex 1)assures the delivery of 24.1 m3/sec (850 cusec) of water into the NepalEastern Canal at all times except when under annual repair and maintenance.These deliveries would depend on proper maintenance of the Don Branch Canal,wholly inside India, by GOI. Agreements have been made between Nepal andGOI for (a) the proper operation and maintenance and repair of Don BranchCanal, and (b) the completion of the civil works in the project area underthe Gandak agreement.

4.08 The amount of water to be delivered to the headgate of the NepalEastern Canal represents about 2% of the mean annual flow of the GandakRiver and 8% of the lowest probable river flow. The project's projectedcropping pattern at full development would utilize 65% to 75% of thissupply from May through September and about 30% to 50% during the dry seasonmonths; thus, sufficient water would be available for the project area andwould permit expansion at a later date by means of lift irrigation or ex-tension of the Nepal Eastern Canal from Arwa River to Bagmati (Annex 6).During negotiations assurances were obtained that HMGN, with the help ofconsultants, would conduct a study of the feasibility of a pumping schemeto lift water from the Nepal Eastern Canal to irrigate areas north and ad-jacent to it; a copy of the report would be provided the Association with-in 18 months of the credit effectiveness.

4.09 The 14 existing tubewells to be improved under the project wouldbe expected to yield 50 1/sec; each of the 14 new tubewells, 80 1/sec. Theywould irrigate 75 and 120 ha net area per well, respectively. Water balancestudies indicate an average annual recharge of about 50 million m3, whileanticipated withdrawals would amount to about 27 million m3. If the studyof the pump scheme (para 4.08) shows that low lift pumping is more economicalthan tubewells, it would be desirable to resite some of the proposed newtubewells further north on land that cannot be irrigated by low lift pumpsfrom the canal. The siting of these new wells would be the responsibilityof the consultants and would be decided when the study results are available.

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4.10 Construction Schedule. Because of the heavy monsoon rains theconstruction season is limited to November/December to June. HMGN expectsthat GOI will complete all its share of the works by March 1, 1973. Bidsfor project works in Block 1 for which tender documents have been completedduring the bridging operation (para 4.05) would be called as early as pos-sible so that works could be undertaken in the 1973/74 dry season. There-after, works in other blocks would be scheduled to start as soon as tenderdocuments are prepared and land has been acquired. All blocks would be com-pleted by June 1978 (Annex 7). This schedule is realistic considering therestricted working seasons.

4.11 Improvement of the existing 14 tubewells and the construction oftheir canal distributary systems would be performed in the dry season of1974/75.

C. Cost Estimates

4.12 The total cost of the project would be about NRs 102 million(US$10.1 million) as detailed in Annex 8 and summarized below:

Local Foreign Total Local Foreign Total- NPRs million ------ -----US$ million------

Land Acquisition 11.1 - 11.1 1.10 - 1.10

Civil WorksSurface 14.5 4.4 18.9 1.43 0.44 1.87Groundwater 2.9 2.8 5.7 0.28 0.28 0.56Buildings and Stores 3.1 2.1 5.2 0.30 0.21 0.51

Equipment and Spares 0.2 6.8 7.0 0.02 0.67 0.69

Consultants 3.0 17.2 20.2 0.30 1.70 2.00

Administration 9.3 - 9.3 0.92 - 0.92

Subtotal 44.1 33.3 77.4 4.35 3.30 7.65

On-Farm Development 10.1 - 10.1 1.00 - 1.00

ContingenciesPhysical 3.2 3.1 6.3 0.32 0.30 0.62Price 5.0 3.6 8.6 0.49 0.36 0.85

Subtotal 8.2 6.7 14.9 0.81 0.66 1.47

Total 62.4 40.0 102.4 6.16 3.96 10.12

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4.13 Cost estimates are based on unit rates and prices of similar worksconstructed in Nepal and are net of custom duties. Except for land acqui-sition and on-farm development, physical contingencies are estimated at 10%on all items and price escalation was calculated at the rate of 7% per annumfor local costs and 5% for foreign exchange costs on the unexpended balance.The estimated foreign exchange cost of US$4.0 million would be about 39%of project costs. The above cost estimate does not reflect the recent deval-uation of the United States Dollar.

D. Financing

4.14 Financing Plan. The financing plan proposed for the project isshown below:

% ofNRs million US$ million Project Cost

IDA Credit

Foreign costs 40.0 4.0 39Local costs 20.8 2.0 20

60.8 6.0 59HiMGN Contribution

Local costs 31.5 3.1 31

Farmers' Contribution

Local costs 10.1 1.0 10

102.4 10.1 100

4.15 The proposed IDA credit of US$6.0 million would finance theforeign exchange costs of the project and 50% of the local costs excludingland acquisition and on-farm development, i.e. about 59% of the projectcosts. HMGN would provide 51% of the local costs requirement or 31% of theproject costs, and farmers' contribution in the form of own labor foron-farm development works would provide the remaining 10% of costs of theproject. A breakdown of projected annual expenditures and a quarterlydisbursement of the IDA credit are presented in Annexes 8 and 9.

4.16 Procurement and Contracts. In order to phase construction withthe training of Nepalese engineers and extension workers and with on-farmdevelopment, civil works would be spread over five working seasons. Therewould be about six contracts for works in 12 blocks, one contract forBlock 1 for which contract documents are completed, one contract each forthe combined Blocks 2 and 3; Blocks 4, 5 and 6; Blocks 7 and 8; Blocks 9and 10; and Blocks 11 and 12 (Map 3896). The improvement of Nepal Eastern

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Canal would be in 1 or 2 contracts. Construction of transmission lines,civil works and well drilling in the groundwater area would be in a separatecontract. The value of each contract would range between US$300,000 andUS$500,000.

4.17 Assurances were obtained during negotiations that equipment andvehicles (Annex 10) would be procured and civil works would be awarded afterinternational competitive bidding in accordance with the Association'sGuidelines; and that civil works contractors would be prequalified. In orderto avoid delays which could be grounds for claims by contractors, assuranceswere also obtained during negotiations that no civil works tenders would beissued until the lands required had been acquired by HMGN. Though Nepalhas a Treaty of Trade and Transit with India which gives preferential customsduties to goods imported into either country from the other, this would notaffect project procurement as bids on all equipment and spare parts underthe project would be compared on c.i.f. values without custom duties.

4.18 Disbursement. Disbursement from the proposed credit would coverthe cif cost of imported equipment and spares (US$0.7 million) and 100% ofthe foreign cost of consultants (US$1.7 million). Disbursement for civilworks (US$2.5 million) would be at a percentage (presently estimated at 85%)of progress payments as certified by the consultants. An unallocated sum(US$1.1 million) would be available to meet physical contingencies and priceescalation of the above. Disbursement would not be made for the costs ofland acquisition, administration or on-farm development works, nor foroperation and maintenance (other than equipment as specified in Annex 10).

4.19 Accounts and Audit. Assurances were obtained during negotiationsthat (a) NZIDB would maintain its own accounts and carry out internal auditsregularly; (b) the project accounts would be maintained separately andaudited annually by an independent auditor acceptable to the Association;and (c) copies of the audit report would be sent to the Association withinfour months after the close of each fiscal year.

V. ORGANIZATION AND MANAGEMENT

5.01 Project Organization. Irrigation projects are generally planned,designed, constructed, operated and maintained by the Department of Irriga-tion, Hydrology and Meteorology of the Ministry of Food, Agriculture andIrrigation. Because this would be the single largest integrated agricul-tural development project to be undertaken in Nepal, HMGN has establishedNZIDB under the Development Board Act of 1956, to be responsible ffor itsexecution, management, operation and maintenance. This would insure effi-cient coordination of the various activities necessary for such developmentin one organization instead of being spread over several departments andinstitutions. The Board will be responsible for irrigation developmentthroughout the Narayani Zone, one of the fourteen zones into which Nepal isdivided. The zone includes five districts. NZIDB will be funded by anannual budget allocation which would be sufficient to cover all estimated

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project costs except on-farm development. Its powers are vested in aneight-member Board of Directors appointed by HMGN, consisting of the Secretary,Ministry of Food. Agriculture and Irrigation (Chairman), six members repre-senting government agencies and the Project General Manager. The Boardwould determine-i`olicy; its appointed General Manager would be the chiefadministrative officer responsible for staff appointment, dismissal andassignment of duties within the general rules of the Nepal Public ServiceCommission. Consultant§ would be engaged under the project to assist NZIDBin project implementation (para 4.06 and Annex 11). Since NZIDB is a newand untried agency, drawing its key staff from several ministries, its successin implementing and managing the project will depend on strong support fromHMGN as well as on the assistance and training of NZIDB staff by theconsultants.

5.02 NZIDB will have three divisions (see Organization Chart, IBRD6877 (R)). The Administration and Finance Division would be responsiblefor general administration, personnel, accounting, finance, procurement andinventory control of equipment and supplies. The Engineering Division wouldbe responsible for planning, design, supervision of construction of allworks and operation and maintenance of the irrigation and drainage systems;working closely with the Extension Service Section of the AgriculturalDivision, it would render technical assistance to farmers on on-farm devel-opment works. The Agriculture Division would be responsible for extensionwork and for collaboration with AM4C and ADBN in the distribution of thenecessary inputs and credit to farmers mainly through cooperatives. In col-laboration with the Parwanipur Research Station, it would conduct research,including experiments on promising crops such as sugar beets for the projectarea. Key administrative staff would be transferred from the other Govern-mental ministries and departments. The engineers and technicians in theEngineering Division would be seconded from the Department of Irrigation,Hydrology and Meteorology. Although these men are mostly young and inexperi-enced, they are graduates of universities and technical colleges in India orNepal and are expected to learn quickly with the guidance of the consultants.Likewise the staff of the Agriculture Division who are graduates of similarinstitutions and some Junior Technical Assistants with high school certifi-cates and training in agriculture would be seconded from the related depart-ments and corporations of the Ministry of Food, Agriculture and Irrigation.They would receive on-the-job training under the guidance of the consultants.

5.03 Assurances were obtained during negotiations that NZIDB would beestablished with rules satisfactory to the Association and managed at alltimes by a full-time General Manager with qualifications and experienceacceptable to the Association and that HMGN would cause the necessary inputsand credit to farmers in the project area to be provided. As the jurisdic-tion of the NZIDB extends over a considerably larger region than the proj-ect area and as the NZIDB would not have sufficient staff for work beyondthe present project, an assurance was obtained during negotiations thatNZIDB would work exclusively on the project until its completion. It wouldbe a condition of effectiveqess of the credit that a General Manager withqualifications and experience acceptable to the Association had been appointed.

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5.04 Monitoring of Benefits. In order to measure the economic benefitsand changes in farmers' income as a result of the project, NZIDB, in collab-oration with the Economic and Statistics Division of the Ministry of Food,Agriculture and Irrigation, would conduct field surveys, collect pertinentinformation and data and carry out an evaluation study of the project results.This work would start from the first project year in order to obtain accuratebenchmark data and continue for some years after completion of the projectworks.

5.05 Operation and Maintenance (O & M). NZIDB would be responsible forthe 0 & M of both the surface and groundwater irrigation systems down toturnouts for each irrigation service unit. The consultants would prepareo & M manuals for the irrigation systems. Farmers in each service unit wouldbe organized into an "Irrigation User Group" to be responsible for the con-struction as well as 0 & M of on-farm water courses and field drains underbhe direction of NZIDB's engineers.

5.06 Recovery of Costs. Farmers pay a land tax as part of generalt:axation. This tax has varying rates depending on classes of land; theaverage land in the project area (Class II) bears a tax of NRs 70 per ha.By providing perennial irrigation, the land would be reclassified as Class Iwith a tax of NRs 81 per ha.

5.07 Farmers in surface irrigation projects constructed by HMGN cur-rently are charged about NRs 6.0 per ha for water, a rate much below theestimated 0 & M costs. Nepal has had no experience in the operation ofstate-owned tubewells or in charging farmers for the groundwater. TheN4epal Irrigation, Electricity and Related Water Resources Act of 1967(Annex 12) authorizes a water cess on landowners served by licensed surface:Lrrigation organizations. It also provides HMGN with the legal authorityt1o levy charges on users of publicly constructed surface and groundwater:Lrrigation works.

';.08 All beneficiaries in the project area would pay the full 0 & Micost together with a portion of the investment cost of the project. Theamnual 0 & M cost of the surface irrigation system is estimated at NRs 80/hauhile that of the groundwater system at NRs 160/ha. For the purpose ofestimating farm incomes, it was assumed that at full development farmerswould also pay an annual investment recovery charge of NRs 160/ha for botht:he surface and groundwater systems; thus together with 0 & M cost the totalproject charges for a surface water system would be NRs 240/ha and forg,roundwater NRs 320/ha. These levels of project charges would be equivalenti:o 20-25% of incremental farm incomes at full development in Year 10 andwould result in recovery of investment costs including contingencies at 4%interest during the 50 year project lifetime.

5.09 In order to measure the subsidy element, full project cost as well.as the above project revenues were discounted at 10% over the project lifeof 50 years. Comparison between the two results shows that the presentvalue of the government subsidy amounts to about NRs 45 million or 44% of,osts. Including sunk costs the corresponding figures would be NRs 95

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million and 62%. Considering the current low per capita income in theproject area and that even with the project the income would still remainbelow the national average, this level of public subsidy would be justified.Assurances were obtained during negotiations that, beginning not later thanone year after completion of the works in each block or each tubewellcommand area, HMGN would establish and collect water charges to recoverfrom the farmers benefitting under the project (a) the operation and main-tenance costs of the works as they are incurred; and (b) in progressivesteps over a reasonable period of time, as much as practicable of theinvestment cost of the project, having due regard to farmers' incentivesand capacity to pay. HMGN would also review and, if necessary, revise thewater charges not less than once every five years.

VI. PRODUCTION, MARKET PROSPECTS, PRICES AND FARM INCOME

6.01 Production. In the next 10-15 years paddy and sugarcane wouldcontinue to be the major wet season crops. Wheat, the principal dry seasoncrop, currently planted on about 25% of the area, would increase to about50% with the project. Oilseeds, pulses, and vegetables would continue tooccupy about 15% of the area during the dry season. With the project, thecropping intensity would increase from the present 135% to 170% as presentedin Annex 3 and summarized below:

Cropped Area (ha) Production ('000 tons)Without With Without With

Present Project Project Present Project Project

Paddy-Local 27,200 28,260 15,700 40.8 48.0 41.7Paddy-HYV - - 13,910 - - 48.7Sugarcane 1,570 1,570 3,140 23.6 28.3 125.6Wheat 7,850 9,420 15,700 7.9 11.3 47.6Oilseeds 1,200 1,570 1,570 0.5 0.6 1.2Pulses 1,500 1,570 1,570 0.8 0.8 1.3Vegetables 1,570 1,570 1,570 8.6 9.4 18.8

Total 40,890 43,960 53,160

The "Without Project" production assumes a small increase in paddy and wheatarea and a 1% per year increase in yields. Expected yield levels in ton/hafor the main irrigated crops under the project are as follows (figures inparentheses represent current yields): paddy, 3.0 (1.5); wheat, 3.0 (1.0);and sugarcane, 40.0 (15.0). These yield levels would be reached graduallyover a ten-year period following the start of irrigation.

6.02 Market Prospects. Nepal is expected to continue to be a net ex-porter of rice and wheat to India. Even if India becomes self-sufficientin foodgrain, it is likely that the farmers in the project would still findIndian markets in Bihar, Uttar Pradesh and West Bengal because of the pro-jected regional shortages. Bangladesh is another possible export market.

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Oilseeds, pulses and sugarcane will continue to be in deficit in Nepal andthe quantity of these crops that can be supplied by the project is relativelysmall compared to the total shortages.

6.03 Prices. Prices used for farm budget analysis represent an averagefarm gate post-harvest price received for each commodity in recent years.Over 70% of the marketed produce is sold during the first three months afterharvest. Prices during this period are determined by the market conditionof the Nepal-India border region because most of the marketed foodgrainsurplus is sold in the State of Bihar in India. Farm inputs are valued atcurrent prices.

6.04 Farm Income. Farm incomes of representative farms in the projectarea have been analyzed and are presented in Annex 13 and summarized below.Since farm size varies (para 3.08), three farm models have been chosen,0.5 ha, 2 ha and 5 ha. The first model represents farms smaller than 1 hasince more than half the number of holdings of less than 1 ha are of about0.5 ha size. The 2-ha farm represents farms between 1-3 ha which comprise30% of the project area. The last model covers farms larger than 3 ha.

Farm Income

With Project Project Charges(excluding as %project Project of Incremental

Farm Size Without Project charges) Charges Income(ha) --- ------------- (NRs)…----- (%)

SurfaceIrrigation

0.5 970 1,990 120 12

2.0 2,680 5,990 480 15

5.0 3,290 8,690 1,200 22

TubewellIrrigation

2.0 2,680 5,500 640 23

VII. BENEFITS AND JUSTIFICATION

7.01 Economic Benefits. The provision of perennial irrigation and otherinputs and services under the project would bring intensive and modern agri-culture to some 31,400 ha, which are currently under rainfed subsistencefarming. The major benefits from the project would be the substantial in-crease in agricultural production and the resulting increased incomes and

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employment opportunities of some 20,000 farm families in the area, abouttwo-thirds of whom are small farmers owning less than 1 ha. Among theintangible benefits are the demonstration effects of the project, institu-tion-building and training in various agricultural disciplines, all of whichwould contribute to agricultural development in Nepal.

7.02 At full development the annual gross value of project production,at projected 1980 world market prices, adjusted to farm-gate value, isexpected to increase from the current NRs 47 million to NRs 122 million,more than doubling the expected output without the project (NRs 51 million).After deducting all production costs except labor, the incremental value ofthe net annual output attributable to the project would be NRs 42 million(US$4.2 million). Labor has been costed at the full market rate of NRs 5per day only in the peak seasons (1 month without the project and 2 monthswith the project) and at a shadow rate of NRs 1 per day at other times. Nodistinction has been made between family and hired labor for the purpose ofeconomic analysis. Net annual foreign exchange earnings from the increasedpaddy and wheat exports would reach NRs 55 million (US$5.5 million). Therewould also be some import substitution savings from the increased productionof sugarcane, oilseed and pulses.

7.03 The economic rate of return, excluding sunk costs, is estimatedat 21% (Annex 14). If sunk costs without interest, estimated at NRs 50million, were costed in the first project year, this rate would be reducedto 14%. In order to test the economic feasibility of the tubevell irrigation,separate economic analyses for surface and groundwater irrigation componentshave been performed. The analyses show that both subprojects are economicallyviable, since the economic rates of return are estimated at 24% and 14%, re-spectively; and with the sunk costs 14% and 11%, respectively.

7.04 Though the tubewell scheme has a lower rate of return, it wouldserve to develop the institutional capacity for the construction and manage-ment of future tubewell projects. Its current investment cost is highbecause of the small number of new wells and the high costs of consultantsand administration per well. A future project with a larger number of wellswould give a higher rate of return.

7.05 A sensitivity analysis shows that there is moderate sensitivityto the shadow price of labor: if all labor is valued at NRs 5 per man-day,approximating the wage rate for hired labor at peak periods, the rate ofreturn falls to 16% (Annex 14). The economic viability of the project isalso secure for reasonable ranges of variation in benefit and cost variables.A 20% increase in investment costs reduces the rate to 18% while a 20%reduction in benefits would lower it to 17%. Even with an extreme combinationof a 20% increase in investment costs and a 20% reduction in benefits,together with a 2-year delay in project completion, the rate of return wouldstill remain about 14%. The rate of return is moderately sensitive toassumptions of future cropping patterns as returns per hectare for wheat,sugarcane and vegetables are significantly higher than for the other crops.Replacing the assumed increased wheat area of 6,200 ha with pulses andoilseeds, lowers the rate of return to 18%.

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7.06 Because of the complex: socio-economic characteristics of thelabor force (para 3.10), poor cadastral data in the project area and lackof reliable statistics on the transient seasonal farm labor from India,the quantitative account of distributive and employment effects of theproject cannot be accurately estimated. However, the direction of the impactis clear. Practically every farmer in the area would be better off comparedto the condition projected under "without project." The many subsistencesmallholders in the project area estimated at two-thirds of the projectfarm population, would be the primary beneficiaries of the project throughincreased and stable income and employment opportunities. During theproject construction period, aggregate annual employment of labor solelyattributable to the project construction would be about 7-8,000 man-years.The additional agricultural output produced by the project would also stimu-late marketing, processing and supporting industries which would undoubtedlycreate additional employment opportunities in the project area.

7.07 Ecology and Environment. The project would not require resettle-ment of any farmers nor construction of new villages. It would providedrainage which would help in reducing floods and soil erosion and minimizingwaterlogging. In addition, increased production, particularly of pulses andvegetables, would improve the quality of human nutrition.

7.08 There is no schistosomiasis in Nepal but the perennial irrigationmay increase the incidence of malaria and other water-associated diseases,insect pests, weeds and rodents that affect high-yielding plants and man.There is a campaign for malarial eradication over the whole of Terai andNZIDB through its Extension Services Section would train farmers in the properuse of chemicals to control pests and rodents.

7.09 Currently the growing of Marijuana or "Ganja" is licensed by theGovernment. HMGN has, however, expressed intention to further restrict theproduction and distribution of all narcotic drugs in Nepal. They also as-sured the Association that the cultivation of narcotic plants would be pro-hibited in the project area.

VIII. AGREEMENT REACHED AND RECOMMENDATIONS

8.01 During credit negotiations, agreement was reached on the followingprincipal points:

(a) should a farmer fail to carry out on-farm development worksas requested by NZIDB within one year after construction ofthe tertiary canals and drains serving his area, NZIDB wouldundertake to construct these works and recover the costsfrom the landowner (para 4.03);

(b) a consulting firm acceptable to the Association would beappointed on terms and conditions satisfactory to theAssociation (para 4.06);

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(c) the rules to be issued by NZIDB would be satisfactoryto the Association (para 5.03); and

(d) the necessary agricultural inputs and credit would beprovided to farmers in the project area (para 5.03).

8.02 A condition of effectiveness of the proposed credit would be thatNZIDB's General Manager with qualifications and experience acceptable tothe Association, shall have been appointed (para 5.03).

8.03 The proposed project constitutes a suitable basis for an IDAcredit of US$6 million on standard IDA terms. The Borrower would be theKingdom of Nepal.

ANNEX 1Page 1

NEPAL


Agreement Between His Majesty's Government of NepalAnd The Government of India on the Gandak Irrigation and Power Project

Preamble. - WHEREAS His Majesty's Government of Nepal and theGovernment of India consider that it is in the common interests of bothNepal and India to construct a barrage, canal head regulators and other ap-purtenant works about 1,000 feet below the existing Tribeni canal headregulator and of taking out canal systems for purposes of irrigation anddevelopment of power for Nepal and India (hereinafter referred to as "theproject").

AND WHEREAS in view of the common benefits, His Majesty's Govern-ment have agreed to the construction of the said barrage, canal head regu-lators and other connected works as shown in the Plan annexed to this Agree-ment to the extent that they lie within the territory of Nepal, by and atthe cost of the Government of India.

NOW THE PARTIES AGREE AS FOLLOWS: -

1. Investigation and Surveys. - His Majesty's Government authorisethe Project Officers and other persons acting under the general or specialorders of such officers to move in the area indicated in the said Plan withmen, material and equipment as may be required for the surveys and investi-gations in connection with the Project, before, during and after construc-tion, as may be found necessary from time to time. These surveys includeground, aerial, hydraulic, hydrometric, hydrological and geological surveys;investigations for communication and for the alignment of canals and formaterials required for the construction and maintenance of the Project.

2. Authority for the execution of works and their maintenance. -(i) His Majesty's Government authorise the Government of India to proceed

with the execution of the Project and for this purpose His Majesty'sGovernment shall acquire all such lands as the Government of India mayrequire and will permit the access to, the movement within and the residencein the area indicated in the Plan of officers and field staff with labourforce, draught animals, vehicles, plants, machinery, equipment and instrumentsas may be necessary for the execution of the Project and for its operationand maintenance after its completion.

(ii) In case of any apprehended danger or accident to any of thestructures, the officers of the Government of India will execute all workswhich may be necessary for repairing the existing works or preventing suchaccidents and/or danger in the areas indicated in the Plan. If any of suchworks have to be constructed on lands which do not belong to the Government

ANNEX 1Page 2

of India, His Majesty's Government will authorise these works to be executedand acquire such additional lands as may be necessary for the purpose. Inall such cases the Government of India shall pay reasonable compensationfor the lands so acquired as well as for damage, if any, arising out of theexecution of these works.

3. Land acquisition. - (i) His Majesty's Government will acquireor requisition, as the case may be, all such lands as are required by theGovernment of India for the Project, i.e., for the purpose of investigation,construction and maintenance of the Project and the Government of Indiashall pay reasonable compensation for such lands acquired or requisitioned.

(ii) His Majesty's Government shall transfer to the Governmentof India such lands belonging to His Majesty's Government as are requiredfor the purpose of the Project on payment of reasonable compensation by theGovernment of India.

(iii) Lands requisitioned under paragraph (i) shall be held by theGovernment of India for the duration of the requisition and lands acquiredunder sub-clause (i) or transferred under sub-clause (ii) shall vest in theGovernment of India as proprietor and subject to payment of land revenue(MIalpot) at the rates at which it is leviable on agricultural lands in theneighbourhood.

(iv) When such land vesting in the Government of India or anypart thereof ceases to be required by the Government of India for thepurposes of the Project, the Government of India will reconvey the same toIlis Majesty's Government free of charge.

4. Quarrying. - His Majesty's Government shall permit the Govern-ment of India on payment of reasonable royalty to quarry materials, such asblock stones, boulders, shingles and sand required for the constructionand maintenance of the Project from the areas indicated in the said Plan.

5. Communication. - (i) His Majesty's Government shall allowthe Government of India to construct and maintain such portion of theMain W4estern Canal which falls in the Nepal territory and to construct andmaintain communications for the construction and maintenance of the Project.The roads will be essentially departmental roads of the Project and theiruse by commercial and non-commercial vehicles of Nepal will be regulatedas mutually agreed upon between His Majesty's Government and the Governmentof India.

(ii) The bridge over the Gandak Barrage will be open to publictraffic, but the Government of India snall have the right to close thetraffic over the bridge for repair, etc.

(iii) The Government of India agree to provide locking arrangementsfor facility of riverine traffic across the barrage free from payment ofany tolls whatever, provided that this traffic will be regulated by the

ANNEX 1Page 3

Project staff in accordance with the rules mutually agreed upon betweenHis Majesty's Government and the Government of India.

(iv) His Majesty's Government agree to permit installation oftelegraph, telephone, and radio communications as approximately indicatedin the Plan for the bona fide purpose of the construction, maintenance andoperation of the Project.

(v) The Government of India shall permit the use of internaltelegraph, telephone and radio communications as indicated in the Plan tothe authorised servants of His Majesty's Government in emergencies, providedsuch use does not interfere with the construction, maintenance and operationof the Project.

6. Ownership, operation and maintenance of works. - Subject tothe provisions of sub-clause (v) of clause 7, all works connected with theProject in the territory of Nepal will remain the property of and beoperated and maintained by the Government of India.

7. Irrigation for Nepal. - (i) The Government of India shallconstruct at their own cost the Western Nepal Canal including the distribu-tary system thereof down to a minimum discharge of 20 cusecs for providingflow irrigation in the gross commanded area estimated to be about 40,000acres.

(ii) The Government of India shall construct the Eastern NepalCanal from the tail-end of the Don Branch Canal up to river Bagmati includingthe distributary system down to a minimum discharge of 20 cusecs at theirown cost for providing flow irrigation in Nepal for the gross commandedarea estimated to be 1,03,500 acres.

(iii) His Majesty's Government shall be responsible for theconstruction of channels below 20 cusecs capacity for irrigation in Nepalbut the Government of India shall contribute such sum of money as they mayconsider reasonable to meet the cost of construction.

(iv) The Nepal Eastern Canal and the Nepal Western Canal shall becompleted, as far as possible, within one year of the completion of thebarrage.

(v) The canal systems including the service roads situated inNepal territory except the Main Western Canal, shall be handed over to HisMajesty's Government for operation and maintenance at their cost.

Also, the head regulator of the Don Branch Canal shall be operatedby His Majesty's Government keeping in view the irrigation requirements ofareas irrigated by this branch canal in India and Nepal. (a)

(a) This has been added in accordance with the revised agreement signed onthe 30th April 1964.

ANNEX 1Page 4

8. Power development and reservation for Nepal. - (i) TheGovernment of India agree to construct one Power House with an installedcapacity of 15,000 KWl in the Nepal territory on the Main Western Canal.

(ii) The Government of India also agree to construct a transmissionline from the Power House in Nepal to the Bihar border near Bhaisalotanand from Sugauli to Raxaul in Bihar in order to facilitate supply of poweron any point in the Bihar Grid up to and including Raxaul.

(iii) The Government of India shall supply power to His Majesty'sGovernment at the Power House and/or at any point in the Grid up to andincluding Raxaul to an aggregate factor not below 0.85. The charges forsupply at the Power House shall be the actual cost of production, and onany point on the Grid up to Raxaul it shall be the cost of production plusthe cost of transmission on such terms and conditions as may be mutuallyagreed upon.

(iv) His Majesty's Government will be responsible for the construc-tion at their own cost of the transmission and distribution system for sup-ply of power within Nepal from the Power House or from any point on theGrid up to and including Raxaul.

(v) The ownership and management of the Power House shall betransferred to His Majesty's Government on one year's notice in writinggiven by them to the Government of India after the full load of 10,000 KWat 60 per cent load factor has been developed in Nepal from this PowerHouse.

(vi) The ownership of the transmission system constructed by theGovernment of India at its cost shall remain vested in the Government ofIndia, but, on transfer of the Power House, the Government of India shallcontinue the arrangements for transmission of power, if so desired by HisMajesty's Government, on payment of the cost of transmission, providedthat His Majesty's Government shall have the right to purchase thetransmission system from the Power House to Bhaisalotan situated in theNepal territory on payment of the original cost minus depreciation.

(vii) The Government of India shall be free to regulate the flowinto or close the Main Western Canal Head Regulator temporarily, if suchworks are found to be necessary in the interest of the efficient maintenanceand operation of the Canal or the Power House, provided that in suchsituations the Government of India agree to supply the minimum essentialpower from the Bihar Grid to the extent possible on such terms and condi-tions as may be mutually agreed upon.

9. His Majesty's Government will continue to have the right towithdraw for irrigation or any other purpose from the river or its tribu-taries in Nepal such supplies of water as may be required by them from timeto time in the Valley.

ANNEX 1Page 5

For the trans-Valley uses of Gandak waters, separate agreementsbetween His Majesty's Government and the Government of India will beentered into for the uses of water in the months of February to Aprilonly. (b)

10. Deleted. (c).

11. Sovereignty and Jurisdiction. - Nothing in this Agreementshall be deemed to derogate from the sovereignty and territorial jurisdic-tion of His Majesty's Government in respect of lands acquired by HisM4ajesty's Government and made available to the Government of India for:investigation, execution and maintenance of the Project.

12. Arbitration. - (1) Any dispute or difference arising out ofor in any way touching or concerning the construction, effect of meaningof this Agreement, or of any matter contained herein or the respectiveiMihts and liabilities of the parties hereunder, if not settled by discus-sion, shall be determined in accordance with the provisions of this clause.

(2) Any of the parties may by notice in writing inform the otherparty of its intention to refer to arbitration any such dispute or dif-ference mentioned in sub-clause (1) and within 90 days of the delivery ofsuch notice, each of the two parties shall nominate an arbitrator forjointly determining such dispute or difference and the award of thearbitrators shall be binding on the parties.

(3) In case the arbitrators are unable to agree, the partieshereto may consult each other and appoint an Umpire whose award shall befinal and binding on them.

(b) This has been amended vide the revised agreement signed on the 30thApril 1964.

The original clause reads as follows: -

"9. Protection of Nepal's riparian rights. - Hlis Majesty's Governmentwill continue to have the right to withdraw for irrigation or any otherpurpose from the river or its tributaries in Nepal such supplies of water.1s may be required by them from time to time and His Majesty's Governmentagree that they shall not exercise this right in such manner as is likely,in the opinion of the parties hereto prejudicially to affect the waterrequirements of the Project as set out in the schedule annexed hereto."

The schedule referred to may be seen in Appendix II.

(c) This has been deleted in accordance with the revised agreement signedon the 30th April 1964.

The original clause reads as follows: -"10. Pro rata reduction of supplies during period of shortage. -

Whenever the supply of water available for irrigation falls short of therequirements of the total area under the Project for which irrigation hasto be provided the shortage shall be shared on pro rata basis betweenthe Government of India and His Majesty's Government."

ANNEX 1Page 6

13. This Agreement will come into force with effect from thedate of signatures of the authorised representatives of His Majesty'sGovernment and the Government of India respectively.

IN WITNESS WHEREOF the undersigned being duly authorised thereofby their respective Governments have signed the present AGREEMENT inNepali, Hindi and English in duplicate, all three texts being equallyauthentic, at Kathmandu this 19th day of Marg Sambat 2016 corresponding toDecember 4, 1959. For purposes of interpretation the English text shall beused.

For the Government of India - On behalf of

For and on behalf of the IIIS MAJESTY'S GOVERNMENTPRESIDENT OF INDIA - OF NEPAL -

BHAGWAN SAHAY, SUBARNA SHAMSHERE,Ambassador of India. Deputy Prime Minister.

July 12, 1972

ANNEX 1Page 7

(Letter dated 4th December, 1959 from theAmbassador of India and confirmed bythe Deputy Prime Minister of Nepalon the same date)

MY DEAR,

There are a few matters pertaining to the Gandak Irrigation andPower Project Agreement in respect of which certain understandings arenecessary. They are detailed below: -

(a) Sub-clauses (i) and (ii) of clause 3 lay downthat the Government of India shall pay reasonablecompensation for acquisition or requisition ofany lands which may be required for the Project.It is agreed that for purposes of fixation ofrates of compensation His Majesty's Governmentwould appoint an Expert Committee with whichRevenue Officers of the Gandak Project wouldalso be associated. The Committee will visitthe area of the Project and fix the principlesfor assessment of compensation payable for suchlands. The total compensation payable for thelands acquired or requisitioned will be calculatedon the basis of the agreed rates fixed by theCommittee. The Government of India shall depositthe agreed amount of compensation to the creditof His Majesty's Government in the Rashtra Bank.Thereupon His Majesty's Government will makethe required arrangements for payment of compensa-tion to those persons to whom it may be due.

(b) Clause 4 provides that Ilis Majesty's Governmentwill grant permission to the Government of Indiafor the quarrying of materials required forthe construction and the maintenance of theProject in the areas shown in the Plan annexedto the Agreement. It is our understanding thatif suitable materials are not available from theseareas in sufficient quantities His Majesty'sGovernment will permit on the request of theGovernment of India quarrying in such other areasas may be mutually agreed upon.

(c) Sub-clause (ii) of clause 7 of the Agreementstates that under the Eastern Nepal Canal thegross commanded area will be 1,03,500 acres.It may be explained that this gross commanded

ANNEX 1Page 8

area will be possible only on the execution ofthe training works on the river Bagmati for whichcertain proposals have already been under dis-cussion with His Majesty's Government. The riverhas been taking a westward course and certaintraining works are required to be set up in orderto divert it back into its old eastern channelto flow under the Bagmati Railway Bridge. Withoutthe river training scheme the gross commanded areawill not exceed 93,000 acres.

(d) Sub-clause (iii) of clause 7 of the Agreement refersto a contribution by the Government of India ofa sum which they consider reasonable towardsthe cost of construction of channels below 20cusecs capacity for irrigation in Nepal. It isour understanding that such contribution wouldnot cover any cost of land acquisition for thechannels but would be related only to the actualexpenditure on works. As regards the latter itis estimated that a sum of rupees fifteen lakhswill be sufficient and accordingly the Governmentof India will make this sum available to HisMajesty's Government in suitable instalmentsaccording to the progress of construction.

(e) Sub-clause (v) of clause 8 provides that theownership and management of the power houseshall be transferred to His Majesty's Governmenton one year's notice by them after the full loadof 10,000 K.W. at 60 per cent load factor hasbeen developed in Nepal from this power house.It is our understanding that for a period offifteen years after obtaining the ownership andmanagement of the power house His Majesty'sGovernment would be generating secondary powerto the full extent possible and supplying itto the Government of India on payment of itsactual cost of production.

(f) The schedule annexed to clause 9 gives theminimum quantities of water required for theProject after making the allowance for thewithdrawal of water from the upper reaches ofthe Gandak river and its tributaries sufficientfor the irrigation of two lakh acres which isthe maximum area estimated to be available forthe purpose. It is our understanding that ifat any time, due to natural causes, the suppliesin the river are insufficient for all the

ANNEX 1Page 9

purposes His Majesty's Government will beentitled to continue to withdraw water suf-ficient for the irrigation of such area.

(g) His Majesty's Government and the Government ofIndia also agree to set up as early as possiblea Co-ordination Committee consisting of threerepresentatives of each Government with aMinister of His Majesty's Government as itsChairman and the Chief Administrator of theProject as its Secretary. The Committee willmeet from time to time to consider such mattersof common interest concerning the Project asmay be referred to it by either Governmentwith a view to expedite decisions for the earlycompletion of the Project. The Governmient ofIndia will bear all expenditure in connectionwith the working of the Committee, such assalaries of special staff, if any, travellingallowance of members, etc.

2. I shall be grateful if you will kindly confirm the understandingsexplained above.

Yours sincerely,

BHAGWAN SAHAY,Ambassador of India.

His Excellency Sri Subarna Shamshere,Deputy Prime Minister,

His tMajesty's Government of Nepal.

ANNEX 1Page 10

(Exchange of Letters)

Kathmandu,April 30, 1964.

Excellency,

In the course of recent discussions it has been decided by ourtwo Governments that certain clauses of the Gandak Project Agreement re-quire amendment. The terms of this decision are as follows: -

(i) It is agreed between His Majesty's Governmentof Nepal and the Government of India thatClause 10 of the Gandak Irrigation andPower Project Agreement entered into onDecember 4, 1959, shall be deleted andClause 9, shall be modified and shall here-after read as under: -

"Clause 9. Protection of Nepal 's Riparian Rights: -

"His Majesty's Government will continue to have theright to withdraw for irrigation or any otherpurpose from the river or its tributaries inNepal such supplies of water as may be requiredby them from time to time in the Valley.

For the trans-Valley uses of Gandak waters, separateagreements between His Majesty's Governmentand the Government of India will be enteredinto for the uses of water in the months ofFebruary to April only."

(ii) The following shall be added under clause 7(v): -

"Also, the head regulator of the Don branch canalshall be operated by His Majesty's Governmentkeeping in view the irrigation requirements ofareas irrigated by this branch canal in Indiaand Nepal."

I shall be grateful to have your confirmation that the amendmentsagreed upon, which will take effect immediately, are correctly set outabove.

Accept, Excellency, the assurances of my highest consideration.

HARISHWAR DAYAL,Ambassador of India at the Court of Nepal.

His ExcellencyMajor-General Padma Bahadur Khatri,Foreign Secretary,His Majesty's Government of Nepal,

Kathmandu.

ANNEX 1Page 11

NEPAL


Extract from Agreed Minutes of Discussionheld between Irrigation and Power Delegationsof His Majesty's Government of Nepal andGovernment of India at Kathmandu between20th and 27th October 1971.

I. EASTERN NEPAL CANAL OF GANDAK PROJECT

The leader of the Nepalese Delegation stated that accordingto the agreement Nepal was entitled to 850 cusecs at thepoint of entry of Canal in the Nepalese territory.

The leader of the Indian delegation stated that they willabide by the agreement and India was agreeable to supply850 cusecs of water through this canal at all times.

The leader of Nepalese delegation stated that the Governmentof India had earlier agreed to provide Rs 15 lakhs to H.M.G.for the construction of channels below 20 cusecs. The costas now assessed by them is very much higher and they desiredthat the Union's contribution should be revised upwards.

It was agreed that the Government of India will assess thelikely reasonable cost on the basis of the practices adoptedin the project command in Bihar and communicate it to H.M.G.It was agreed that the Project Authorities will completethe construction of the main canals and channels of 20 cusecsand above by June 1972 or 6 (working) months from the dateland is made available for the project whichever is later.

II. CUSTOMS LEVIES ON GANDAK PROJECT

The Indian delegation raised the question of exemption frompayment of customs duty and other taxes on the materials,equipment, machineries, etc. required for the Gandak Projectin the territory of Nepal as is available in the Kosi Project.The Leader of the Indian delegation requested that HisMajesty's Government of Nepal may allow necessary exemptionfrom payment of custom duty during construction and maintenanceof the Gandak Project in Nepal. The Leader of the Nepalesedelegation agreed to place the request before the appropriate

ANNEX 1Page 12

authority of H.M.G. for consideration and communicate theresult to the G.O.I.

Sd ............... Sd..( B. P. Patel) (Krishna Rajbhandari)Secretary Secretary

Ministry of Irrigation & Power Ministry of Water & PowerGovernment of India His Majesty's Gov't., Nepal.

Leader of Indian delegation. Leader of Nepalese delegation.

Signed at Kathmanduon October 27, 1971.

July 12, 1972

NEPAL

BIRGANJ IRRIGATION FROJECT

Climatic Data

Jan. Feb. Mar. Apr. Ma June July Au * pt. Oct. Nov. Dec. Total

Mean Monthly Rainfall (mm)At Sirha 24.3 10.1 l5.)4 23.4 96.7 227.4 367 367.5 188.6 75.8 15.6 1.6 1,413At Parwanipur 26.4 14.8 10.2 15.6 25.3 233.6 436.7 290.6 231.9 50.7 Nil Nil 1,335

Potential Evapotranspiration (mm)At Hardinath 1970) 71.6 7i.6 176.7 220.8 233.4 156.6 155.3 139.5 135.9 112.2 78.6 65.7 1,623.9

Bean Monthly Sunshine (hr:min/day)At Hardinath 0:15 605 8:22 9i07 9:14 6.50 6:31 5:33 5:50 9:23 8:23 8,24 7:50

(Jan. to Mar. obtained from records of 1970 while the remainder observed in 1969)

At Parwanipur 8:03 8:49 7:50 8:48 10:18 5:14 5:09 6:17 6:57 9:07 9:11 8:5 7:53

Mean Monthly Air Temperature (C1)

At Hardinath (1970) 14.1 15.7 22.6 28.3 30.9 28.5 28.5 28.4 28.9 27.3 23.3 19.5 24.7At Parwanipur 16 17.9 23.1 28.5 30.1 30.2 30.2 29.8 29.7 26.1 21.2 17.4 25(Average of 7 years)

Relative Humidity at 0840 hours (%)At Hardinath (1970) 83 79 56 50 60 79 84 82 82 80 76 84 74.6At Parwanipur 83.6 73.5 71.5 71 65.5 83.5 83 88 85 80 78 85 79(A,verage of 2 years)

ANNEX 3Page 1

NEPAL


Aariculture

General

1. The total area of Nepal is about 14.1 million ha of which only1.8 million ha are cultivated and planted to 2.4 million ha of crops. In1970, only 6%, or 117,400 ha of the gross cropped area was irrigated. Themain agricultural regions are the Terai plains and the hill areas, coveringabout 70% and 30%, respectively, of the total cultivated area. Paddy, maize,and wheat are grown on approximately 90% of the cultivated land and cashcrops such as jute, oilseed, sugarcane and potato, on the remainder.

Soils and T2oporaphy

2. The project area, located in Bara and Parsa districts in the Terai,consists of a gravity-fed area of 44,000 ha gross with 28,700 ha irrigatedand a groundwater area of 3,600 ha gross with 2,700 ha irrigated. Soilsare alluvial clay to sandy loams (paddy soils) laid down by rivers from theChuria Hills. The natural drainage is poor and would require upgrading inconjunction with irrigation development. The pH value of the topsoil layerranges from 6.0 to 7.2. These soils are suitable for most subtropical crops.

3. The gradient of the region ranges from 1:200 at foothills inthe northern part of the plain to 1:1,000 near the Indian border. Inthe project area the north-south gradient varies between 1:750 and1:1,000; about 10-15% of the command area would benefit from land shaping.About 90% of the area lands would be classified Class II or III forirrigation suitability under the U.S. Bureau of Reclamation standards.

Climate

4. Annual rainfall is about 1,350 mm, with over 90% occurring betweenMay to October. Ten-day intensity sometimes exceeds 350 mm. About twoyears in ten, less than 1,000 mm or more than 1,600 mm is received, causingcrop losses from drought or flood. Temperatures range from a low of 8°Cin January to a high of 38°C in April and May. Humidity is at 65% to 70%from March to May and ranges between 80% and 85% for the remainder of theyear. Detailed information is given in Annex 2.

5. Climatic and soil conditions favor the production of paddy andsugarcane during the rainy season and wheat, pulses and oilseeds duringthe winter months. From July to September cloudiness delays crop maturity

ANNEX 3Page 2

and inhibits crop yields; the high rainfall hampers crop harvesting andthreshing. Cold weather retards paddy production from January to Aprilbut is more favorable for wheat and pulses.

The Cropping System

6. During the rainy season, about 90% of the project area is in paddy;with sugarcane, vegetables and pulses utilizing another 5%. Most of thesugarcane is grown with semi-perennial irrigation at Tilawe and Sirsiaproject areas. Wheat, winter vegetables, pulses and small oilseeds aregrown from September to May on about 40% of the area for a crop intensityof 135%.

7. Cultivation activities are labor intensive. Some of the labor usedto transplant paddy and harvest paddy and sugarcane migrates from Bihar andWest Bengal, India where unemployment is severe. Bullocks are used for soilpreparation, threshing and transporting. However, in 1970-71, over 125 farmtractors were used to supplement bullock power.

Paddy

8. Nursery and seed-bed preparation starts with the onset of therainy season in May and June. Coarse varieties that mature in 120 to 150days from seeding are planted first and harvested in October and earlyNovember. Long-season fine varieties are usually transplanted between June20 and July 15 when sufficient rains have fallen to reduce the risk of watershortage, and are harvested in late November and December. The earlymaturing varieties give lower yields because of the lack of sunshine andthe heavier infestation of insects and diseases. The late-maturing varietiesgive higher yields and fetch higher prices; but make wheat growing withoutirrigation virtually impossible. Fertilizers and plant protection materialsare seldom used. Only a small area is sown to new varieties.

9. Paddy blast (Pyricularia Oryzae) and bacterial blight (XanthomonasOryzae) are the most serious diseases; the latter affects some of the newhigh-yielding varieties IR5 and IR8, but the new variety IR20 has a goodresistance to these diseases. The coreid bug (Leptocorisa acuta) and stem-borer are the major insect pests but do not seriously affect the crop. Ratsmay damage the standing crop, undermine the bunds, and consume paddy instorage.

10. With irrigation and drainage provided by the project, and withthe expected availability of more disease-resistant varieties, the areaplanted to early paddy should increase considerably in order to havethe possibility of a second crop. With harvesting completed in October,this area would be sown to wheat, pulses or oilseeds. Paddy yields wouldbe expected to increase from the current 1,50Q kg to 3,000 kg per ha atfull development. Already some progressive farmers obtain 4,000 kg per hawith IR8 on irrigated farms in the Tilawe area, whereas tests on theHardinath Demonstration Farm produce yields of 6,000 to 7,000 kg per ha.A projected yield of 3,000 kg as an average of the project area after 10 yearsis thus reasonable.

ANNEX 3Page 3

Wheat

11. As was found on the Hardinath Demonstration Farm and confirmedat the Parwanipur Agricultural Station, optimal sowing time of wheat ismid-November, with harvesting in April. Delay of sowing until mid-Decemberreduces the yield because of the high temperature and hot winds in lateApril and May, which retard vegetative growth, weaken the plants and makethe crop more susceptible to rusts.

12. Since 1966 the dwarf wheat varieties have replaced most of thelocal types. The recommended varieties are the early variety RR21 and theeven better medium varieties S227 and S331. On an experimental basisyield averages 3,000 tb 4,000 kg per ha for these varieties over a two-year period. Agricultural Extension Service recommends NPK fertilizerapplications (80-40-20 or 60-60-30), though actual application rates arelow. Serious pests and diseases have not yet occurred. With a continuousimprovement of promising varieties at the Parwanipur Agricultural Station,the use of irrigation water and sufficient fertilizers, a projected in-crease of the present average productions of 1,000 kg per ha in the projectarea to 3,000 kg within 10 years is considered obtainable and reasonable.

Sugarcane

13. Only about 5% of the project area is planted to sugarcane: themajor portion adjoins the sugar mill at Birganj where supplemental irrigationfrom Tilawe is available; the remainder is cultivated by small farmers inrainfed fields. The sugar factory management tries to stimulate sugarcanegrowing by providing to the growers agricultural advice and credit to purchasecane sets, fertilizers, plant protection chemicals and additional labor forharvesting. Also, transportation is arranged as much as possible for inputsto the farms and for the cane to the mill.

14. Despite all these measures, yields average only 15 tons of caneper ha because planting material produced on the farmers' fields or importedfrom India is impure and of low quality. Besides, insufficient irrigationduring the hot and dry months of May, June and July and the low temperaturesfrom December through February virtually stop growth of the crop. Thesugar mill at Birganj which has excess capacity also accepts sugarcane broughtin from remote, rainfed fields so that the average output of the processedcane is only approximately 8% to 9% refined sugar.

15. The sugar mill at Birganj obtains an average of 25 tons per haof cane on non-irrigated land and about double on irrigated fields on itsown 700 ha area. The sugarcane variety BO50 produced yields of 68 tons perha on varietal trials in Parwanipur. With the project, yields would beexpected to average 40 tons per ha within 10 years' time, due to sufficientwater, improved planting material from the sugar factories and the ParwanipurAgricultural Station, and because of more appropriate cultivation practicesstimulated by better trained agricultural extension services. Since the lowwinter temperatures in the Project area are more suitable for sugar beetproduction, this crop should be included in varietal trials at Parwanipur.

ANNEX 3Page 4

Oilseeds, Pulses, Other Crops

16. Oilseeds, usually mustard, and pulses are important winter cropsseeded either separately or as a mixture after paddy. Gram and pea may beseeded after late paddy. Yields are low, about 400 kg per ha for oilseedsand 500 kg for pulses and would, with irrigation and improved practices,increase to 850 kg and 750 kg per ha respectively.

17. Vegetables are grown on about 5% of the area, mostly for familyuse. The area and yield could be increased with irrigation and improvedcultural practices; however, market demand would not absorb a substantiveincrease in output at profitable prices.

18. Hemp 1/ (cannabis sativa, L.) is also grown solely for its narcoticresin. Hiemp in the project area is known as "ganja" and is presently grownon small plots (1/20 to 1/10 ha) totalling no more than 100 ha scattered overthe area. It is generally planted on light soils and is liberally irrigatedby hand pumps. Investments are high due to the very intensive soil prepara-tion, high fertilizer demand and the special way of selecting only the plantsbearing unfertilized female flowers. The resin is formed only when thesefemale flowers are not fertilized, and since fertilized flowers are worthlessas yielders of "ganja" and male and female plants which normally occur ina hemp field are difficult to distinguish, this hemp growing for "ganja"production involves high risk of failure. HMGN controls the growing ofganja and requires that each grower must possess a license (license feeNRs 5,250/ha). Apart from its use as a drug, the seeds of the plant containup to 20% of a semi-drying oil, rather similar to cottonseed oil, which canbe used for cooking purposes. The net return from reasonably productivefields has varied in recent years, from NRs 500 to NRs 1,500 per 1/10 haplot, depending on the market. Cash costs and returns on a typical 1/10 haplot for a successful crop sold at a good price are as follows:

1/ Hemp may produce three types of narcotics: (a) "jhang" (Hindustani)or "hashish" (Arabic), which is the dried leaves and flowering shootsof male and female plants, both cultivated and wild, and with a lowresin content; (b) "ganja", which is the dried female inflorescenceof special cultivars grown in India and Nepal; and (c) "charas",produced in Central Asia, which is the crude resin collected by rubbingthe tops of the plants with the hands or beating them with a cloth.These narcotics, though quite different in cultivation and resin con-tent, fall under the umbrella te.m "marijuana".

ANNEX 3Page 5

Costs Returns

Fertilizers NRs 100 20 kgManure 20 at NRs 100 NRs 2,000Pruning (skilled labor) 400 Total cash costs 1,045

Subtotal 520 Net return, with license 955License (if obtained) 525 License fee 525

Total cash costs 1,045 Net return, without licensel,480

Area, Yield and Production

19. Based on the foregoing figures a comparison between the presentand future situation (10 years after project works completed) regarding area,yield and production may be summarized as follows:

Present Without Project With ProjectCrops Area Yield Prod. Area Yield Prod. Area Yield Prod.

(ha) kg/ha ('OOOmt) (ha) kg/ha ('OOOmt) (ha) kg/ha ('OOOmt)

Paddy-local 27,200 1,500 40.8 28,260 1,700 48.0 15,430 2,700 41.7Paddy-HYV 13,910 3,500 48.7Sugarcane 1,570 15,000 23.6 1,570 18,000 28.3 3,140 40,000 125.6Wheat 7,850 1,000 7.9 9,420 1,200 11.3 15,700 3,050 47.6Oilseeds 1,200 400 0.5 1,570 400 0.6 1,570 750 1.2Pulses 1,500 500 0.8 1,570 500 0.8 1,570 850 1.3Vegetables 1,570 5,500 8.6 1,570 6,000 9.4 1,570 12,000 18.8

At full development the annual gross value of agricultural production of theproject area, at projected 1980 world market prices, adjusted to farmgatevalue, is expected to increase from the current NRs 47 million to NRs 122million, more than doubling the expected output without the project (NRs 51million).

February 12, 1973

ANNEX 4Page 1

NEPAL


Agricultural Support Services

General

1. At the time of appraisal, HMIGN had three ministries dealing witlhagriculture, viz: the Ministry of Food and Agriculture, the Ministry of LandReform and the Ministry of Water and Power. In the last quarter of 1972responsibility for all aspects of agriculture was placed under an expandedMinistry of Food, Agriculture and Irrigation.

2. The Ministry consists of the Department of Irrigation, Hydrologyand Metereology, the Department of Agricuilture, the Department of Food andthe Department of Land Settlement. The Ministry also has overall responsibilityfor five public sector corporations: the Agricultural Marketing Corporation(AMC), Agricultural Development Bank of Nepal (ADBN), Food Management Corpo-ration (FMC), Nepal Resettlement Company, and the Dairy Development Corpora-tion.

3. The Department of Agriculture consists of the Divisions ofAgricultural Education and Research, Extension, Horticulture, Livestock andVeterinary Services, and Fisheries.

4. The Department of Irrigation, Hydrology and Meteorology comprisesa Planning and Design Division, a Construction Division and a Hydrology andMeteorology Division. In addition there are four Regional Directorates basedin Kathmandu, Suakhet, Pokhara and Dhankuta.

5. Ministries dealing indirectly with agriculture and of importanceto the project include Public Works and Transport (PWT), and Home Panchayats(HP). PWT is responsible for planning, designing, constructing and maintainingall public buildings and public roads. The Ward Panchayat is a publiclyelected government institution representing the citizens of about ten ruralvillages. It has responsibilities for the development of agriculture, minorirrigation and village link roads.

Division of Agricultural Extension

6. The staff from this division is posted in 71 of the 75 districtsand supervised from the Kathmandu central office. The District AgriculturalDevelopment Officer (DADO) has a bachelor of science degree in agricultureand is in charge of the district staff including one or more Junior Techni-cians (JT), and several Junior Technical Assistants (JTA); the number depend-ing on the intensity of agricultural production in the area. In 1970, one

ANNEX 4Page 2

extension worker served an average of 2,000 agricultural households. Theiractivities were aimed at increasing crop production by use of demonstrationplots of high-yielding variety seeds and fertilizers and by publicity. Theyalso estimated crop yields, advised the ADBN on the technical feasibilityof farm plans for loan applicants and helped the AMC distribute seeds andfertilizers.

7. Bara and Parsa districts have had the Extension Division's IntensiveAgricultural Development Programme during the Third Plan. The public sectorsugar mill at Birganj also has an extension staff to work with sugarcanegrowers. In the two districts there are 3 DADOs, 10 JTs, and 49 JTAs to serveabout 80,000 landowners and 40,000 tenants.

Division of Agricultural Education and Research

8. Nepal's agricultural graduates are trained abroad, most of them atIndian agricultural universities. About 700 students will complete thistraining during the Fourth Plan, making a total of about 1,000 graduates toassist the agricultural divisions as technicians, and as DADOs and otherdistrict-level officers.

9. JTs and JTAs are trained at the College of Agriculture, upgradedfrom a School of Agriculture in 1969, and located at Kathmandu. Candidateswith a high school diploma receive three months' basic training in agricultureat the college before assignment to a DADO for six months' practical fieldtraining. Then, an additional three months' training is given at the college;successful candidates receive certificates and a job in the extensionservice, if available. After four or five years of field experience, theJTA may return to the college for six to eight months of specializedtraining for a diploma. Since 1957, 920 certificates have been awarded and626 recipients are employed in extension work as JTAs. About 150 JTs havereceived diplomas; 128 are in extension work.

10. The agricultural research program is designed to increase theflow of yield-increasing agricultural technology. The related disciplinesof agricultural botany, agronomv, agricultural engineering, entomology,plant pathology and soil science are included in research activities conductedat Kathmandu, five field stations, and four agricultural farms. Researchwork has concentrated on the introduction of new varieties, planting dates,crop response to fertilizer application, and control of insects and plantdiseases. Plant breeding work was initiated in 1971.

11. The Divisionl operates an Agricultural Research Station at Parwani-pur, adjoining the project area, where it has concentrated on increasingthe production of paddy, wheat and maize. At this station, USAID providesconsultants and funds for research and extension training on cereal produc-tion and water management. UNDP (NEP-12) provides technical assistance fortraining of the extension staff to conduct field trials and demonstrationswith farmers to show the benefits of the recommended varieties, fertilizeruse and water control. The research a:d extension training work and theconsultant assistance at Parwanipur would be available for use in the projectarea.

ANNEX 4Page 3

Work in the Project Area

12. The work of the Divisions of Extension, and of Education andResearch, is crucial to the success of the project. Under current arrangements,salaries are low, provisions for housing, equipment and travel are inadequate,and the field staff lacks local supervision, technical assistance, and oppor-tunity for advancement. To help solve these problems, the local extensionservice staff would be integrated into NZIDB and would include an extensiondirector-in-charge, 6 extension specialists and 20 to 25 field workers. Theywould be assisted by consultants.

13. Under the project, the current research program at Parwanipur wouldbe continued. New research would include the development of an efficient watermanagement scheme for the area and testing the profitability of alternativecrops such as sugarbeets, cotton, groundnuts, soya beans, pulses, and vege-tables. The research agency would also evaluate the economics of irrigatedfarming under both tubewell and surface irrigation conditions.

Agricultural Marketing Corporation (AMC)

14. The Agricultural Marketing Corporation (AMC) supplies inputs tofarmers and regulates the marketing of farm products. It has the respon-sibility for importing all farm production inputs involving the use offoreign exchange other than Indian rupees, mostly fertilizers, and ofprocuring and importing items such as high-yielding variety seeds and pumpsfrom India. To serve as the importer/wholesaler for the project area andthe adjacent regions, AMC maintains warehouses with 5,000 tons of storagecapacity at Birganj. Within the project area 22 private dealers and 6cooperatives served as AMC fertilizer retailers during 1971. Additionalwholesale storage for inputs would be provided by AMC, if needed. Inaddition, more private retailers can be engaged as needed.

15. All materials are sold on a cash-and-carry basis by AMC, fobthe Birganj warehouse. Farmers also purchase fertilizers and other inputsdirectly from Indian retailers located near the Nepal border. At the timeof appraisal most inputs were readily available at competitive prices within10 km to 15 km of any village in the project area.

16. AMC's experience indicates that a 50-ton capacity rural storeserves adequately for the distribution to farmers of up to 300 tons offertilizers per year and that no additional space is needed by a retaileror a cooperative engaged in selling other inputs and handling short-termagricultural credit loans. More than 500 tons of fertilizers could beretailed from a 50-ton capacity store located on all-weather roads and withimproved communications. A 100-ton capacity warehouse could handle morethan twice these volumes and, at least during the five to ten years requiredto build sales, it also could be used for the storage and marketing ofagricultural produce. Farmers currently drive their bullock carts 5 km to20 km over village trail roads to purchase inputs and market produce.

17. The feasibility study proposed 42 warehouses of 500-ton capacityfor the distribution of inputs and storage of grains. However, the demand

ANNEX 4Page 4

for this volume of grain storage and the economic feasibility of each unitwas not assured. Therefore, this aspect of the proposal would be changed toinclude not more than six storage facilities of 100-ton capacity and six of50-ton capacity, as recommended by AMC. These facilities plus the six exist-ing units would be operated by cooperatives. AMC would train the managersto sell fertilizers and other inputs.

Agricultural Development Bank (ADBN)

18. The ADBN, organized in 1968, functions to provide short-, medium-and long-term loans for agricultural production purposes to farmers and tocooperatives for on-lending to farmer-members. It provides an investmentloan service to individuals and corporate bodies engaged in manufacturingagricultural inputs or processing agricultural commodities. It is authorizedto undertake banking functions in a region only with the approval of theCentral Bank. In 1970/71, its share capital was NRs 22.8 million and anadditional NRs 12.1 million was available from borrowings, deposits andreserves. Loan commitment exceeds NRs 30.0 million, of which more thanNRs 16 million have been disbursed. Overdues were about 20% of loans duefrom cooperatives and 10% of the amounts due from private borrowers.

19. In 1971, the Asian Development Bank granted ADBN a loan of US$2.4million to procure tractors and to hire three expatriate consultants. Theseconsultants, available until 1975, will advise ADBN regarding its organiza-tion and management procedures, and train its managers and accountants forplacement in 135 "model." cooperatives.

20. Cooperatives borrow funds from ADBN at 7% interest and on-lend tocreditworthy farmer-members at 10% interest. Repayment is usually scheduledwithin 60 days of crop harvest. Loan applications are reviewed and clearedby the local JTA and the primary society manager and board before acceptanceby the regional ADBN branch manager. When approved, the borrower receivesa chit authorizing him to procure fertilizers and seeds from the local coopera-tive store or private dealer. Cash loans to pay hired labor are disbursedonly after the fertilizers have been obtained. The procedure is cumbersome,takes considerable time of the borrower, and there is lack of contactbetween the borrower and the loan officer.

21. In the project area, only 6 of 43 cooperatives are providing farmerswith input distribution and production credit services at acceptable levelsof performance. The BIPB proposes to strengthen these 6 and reorganizethe remainder into 12 economically viable units with an office and storagefacilities (para 15). The ADBN has assured HMGN that, through its Birganjbranch office, it would provide funds as needed to finance production inputsand on-farm development works of creditworthy farmers in the project area.It would train and supervise managers and accountants and supervise thelending operations. Lending and collection procedures would be improved.BIPB would provide a technical staff to help each ccoperative develop itsmembership participation and local capital resources.

February 1, 1973

ANNEX 5Page 1

NEPAL


Description of Project Works

A. Existing Works

1. The 1959 agreement between HMGN and Government of India (GOI)provides that GOI would construct a barrage, canal head regulators andother appurtenant works on the Gandak River at the border near Tribenifor irrigation and development of power for Nepal and India. The Gandakworks, costing about US$175 million, when completed would generate 15,000kW of electricity and irrigate a net command area of 1.24 million ha:950,000 ha in Bihar, 230,000 ha in Uttar Pradesh and 60,000 ha in Nepal(see Map IBRD3895). The agreement also stipulates that GOI would constructthe Don Branch Canal for about 92 km in Bihar-India to deliver irrigationwater to the Nepal border and nearby India.

2. GOI agreed to construct, at no cost to NepalA the main canal (NepalEastern Canal) and the secondary canals down to 0.57 mD/sec (20 cusecs) forthe gravity-fed area included in this project. Nepal was to acquire allland needed for these works, also at GOI's expense. GOI also agreed toprovide a cash payment up to Indian Rs 1.5 million (US$200,000) for the dis-tributing works below 0.57 m3 /sec. The Irrigation Department of Governmentof Bihar was responsible for works design and construction in Bihar andNepal. A supplemental agreement completed between HMGN and GOI in October1971 specifies that 24.1 m3 /sec (850 cusecs) of water would be deliveredthrough the Don Branch Canal to the Nepal border at all times, except fornecessary repair and maintenance. This is the source and amount of surfaceirrigation water available for the Birganj project area.

3. At the time of appraisal the barrage, the Don Branch Canal, andabout 75% of the Nepal Eastern Canal had been constructed. By the end ofAugust 1972 excavation of the Nepal Eastern Canal was substantially completed,66 out of 91 structures were built and 5 of the 9 secondary canals werecompleted. At the December 1972 meeting between representatives of the twocountries it was agreed that works would be completed by March 1, 1973, andthat the Nepal Eastern Canal would be ready for commissioning on this date.

ANNEX 5Page 2

4. Ten years ago, HMGN constructed a barrage and canal system atTilawe and at Sirsia that irrigates about 7,000 ha in the project area fromJune to October. Farmers constructed some field watercourses and drainsthemselves without technical guidance from the Irrigation Department.This area is included in the project to provide perennial irrigationand improvement of the distribution system.

5. In the groundwater area, HMGN, under the Indian Aid Program,installed 21 tubewells between 1968-1970. At the time of appraisal,only five wells had been energized and used. The project proposesto energize 14 of these, each with a net command area of 75 ha. Seven wellsare considered unusable either because they pump sand or because of theirlow yields and being too far from power supplies.

B. New Works - Surface Irrigation

6. Main Canal. The Nepal Eastern Canal originates at the Nepal-Indiaborder on the western edge of the project area and extends eastward 62 kmto the Arwa River. It would receive 24.1 m3/sec of water continuously andwould be controlled by a regulator gate located on the Don Branch Canal atthe border. Water would be distributed from the Nepal Eastern Canal to 12major and several minor secondary canals for distribution throughout thecommand area.

7. The proposed project differs somewhat from the original plan inthat water would be provided during both the wet and dry season; thus thesystem, after completion of construction by GOI mainly for wet seasonirrigation, would need eight additional check regulators and fouradditional escapes. A 4.5-rm-wide service road along the entire length ofthe main canal would be surfaced and would become a public road withbridges and feeder road connections to villages in the area.

8. Most of the construction consists of labor-intensive excavationand installation of masonry structures with steel gates. Two civilworks contracts would be tendered, one to include the first 26 km withthe work to be started in 1973/74 and completed in 1974/75; the secondto include the remaining 36 km to be started in 1974/75 and completed in1975/76.

9. Distributary Canals and Drainage. North-south rivers and streamsdivide the project area into 12 self-contained irrigation blocks. Each blockwould be served by a distributing canal system connected to the main canaland consisting of a main secondary canal and several branch secondary andtertiary canals to supply farm turnouts, each serving about 40 ha of netcommand area. There would be about 79 km of main secondary and 210 km ofbranch secondary canals.

ANNEX 5Page 3

10. To remove monsoon flooding, and create conditions more suitablefor higher paddy yields and for planting wheat after paddy, a drainagesystem linking the irrigation service units and farmers' fields to thenatural drains would be constructed. These drains would be providedwith appropriate structures at road and canal crossing points and at the tailends. About 800 km of secondary and tertiary drains with associatedstructures would be included.

11. About 290 km of 3-m width operational roads would be constructedadjacent to most of the main and branch secondary canals to provide accessfor canal operation and maintenance. The feasibility study proposed thatmost of these roads be cobbled and used to provide farm-to-market transportservice for farmers in the area. In addition, the study proposed over 70 kmof cobbled farm-to-market roads to link every village to the canal operationalroads and to BirganJ. However, the appraisal revealed that farmers marketmore produce directly to Bihar-India markets than to Birganj. They alsoprocure a part of their fertilizers and seeds directly from Bihar. The layoutand design of the system and the use of cobblestones did not appear reasonablefor farmer-users. Therefore, the metalling of the canal operational roadswould be restricted to the main canal and the secondary canals that connectwith each of the 18 rural stores. Thus, the project would include the metal-ling of 62 km of roads along the main canal plus about 50 km of 3-mwidth connector roads to the rural stores. Bullocks generally refuse towalk on a cobbled road unless covered with dirt. The NZIDB would reviewthe cost of alternative surface materials before offering contract tenders.

12. Construction of the distributary canals, drainage and road systemswould be labor intensive. Civil works contracts would be preparedto include the canal and road works in each block.

C. Groundwater Pilot Project

13. In the groundwater sub-project, HMGN would monitor and evaluatethe costs and returns expected from tubewell irrigation and methodsof working with farmer-users at each tubewell. The NZIDB would be expectedto plan and execute a program that would achieve these objectives andprovide IDA with the annual reports of the results.

14. Existing Wells. The project would re-equip 14 existing tubewellswith pumps, electric motors, automatic controls, a regulating reservoir,lined main canals and unlined distributary canals, and drains. Eachtubewell has a designed capacity of 50 1/sec to provide perennial irrigationfor 75 ha.

15. New Tubewells. The project would drill and equip 14 new tubewells,each to irrigate 120 ha. The project also provides for the feasibilitystudy of a pumping scheme to lift excess water from the Nepal EasternCanal to irrigate an area with and adjacent to the canal. Should the studyreveal favorable result it would be desirable to resite some of the proposed

ANNEX 5Page 4

new tubewells farther north from the canal on land that cannot be irrigatedby low lift pumps. Each tubewell drilled to a depth of about 150 mwould be fitted with a 35.6 cm diameter mild steel pump chamber to adepth of 80 m. Fiberglass reinforced epoxy resin pipe screens 20.3cm in diameter with appropriate factory perforated slots of 0.16 cmwidth would be installed. Three wells would be equipped with stainlesssteel screens instead of fiberglass to permit the study of differenttypes of construction. Fiberglass pipe of 25.4 cm in diameter wouldbe joined to the pump chamber by a connector and to the screen pipeby a reducer.

16. A 15.2-cm diameter pilot hole would be drilled initially by therotary method to the final depth and logged lithologically and electrically.With these data the portions of the hole to be screened can be identified.The pilot hole would then be reamed to the final 61 cm diameter, thus pro-viding an annular space of about 12.7 cm for placing the gravel packingthrough a tremie pipe.

17. Each well would have a pumphouse and a small regulating reservoir.All main canals leading from the wells would be lined, but all other canalswould be unlined. The area would also be provided with drains. Farmerswould construct at their expense the watercourses, field drains and land-shaping on their holdings, but under the design and supervision of the BIPE.

18. Electricity. About 18 km of 11-kv power line with transformerswould be constructed to provide electric power to operate the 28 tubewellpumps.

19. Equipment, including spares, for the 14 existing wells and the 14new wells would be grouped and offered in one tender in 1973/74. One con-tract would be tendered for the replacing of equipment on existing wellsas well as the drilling of 14 new wells including the construction worksfor the pumphouse,, reservoir, canal and drainage and installation of thetransmission line, on a turn key basis.

D. On-farm Development

20. Landowners would be responsible for the construction of all on-farmworks beyond the outlet gate on tertiary canals. These works includefield watercourses and field drains for the surface and tubewell commandarea and land-shaping wherever needed. NZIDB would provide technicalengineering services to design and lay out an on-farm development schemefor each outlet gate. Landowners would be encouraged and persuadedto adopt the plan and complete construction of the works under NZIDB'sguidance and supervision. In the event of a farmer not completing the workwithin one year after NZIDB had completed the tertiary canals and drains inthe project serving his farm, NZIDB would perform the necessary work andrecover the expenses from the farmer. Irrigation water would not be providedto any farmer until all of the on-farm development work on his land had beencompleted.

ANNEX 5Page 5

E. Equipment for Project Execution, Operation and Maintenance

21. Most of the civil, works would be executed by contractors; therefore,NZIDB would need equipment only for general administration and operationand maintenance purposes. The list includes vehicles, workshop equipment,earth-moving machines and some construction equipment for repair worksas given in Annex 9. Vehicles for consultants are also provided in the list.

F. Buildings

22. Rural Stores. The project feasibility report proposed theconstruction of 42 warehouses, each with 500 tons of storage capacity, tobe used to store and distribute agricultural inputs and to store grains.The size and number of these stores are considered excessive and noteconomically viable. Hence to facilitate the distribution of inputs, theproject would provide for the construction of only up to six ruralstores of 100 tons storage capacity and up to six rural stores of 50 tonsstorage capacity. NZIDB would arrange for ADBN and local cooperatives town and operate these facilities.

23. Project Buildings. NZIDB would need a headquarters office andcanal offices, housing for staff and consultants, a workshop and a trainingcenter. These buildings would be designed and tendered for constructionby NZIDB.

G. Other Facilities and Services

24. NZIDB would finance the Agricultural Extension and Cooperationstaffs to work with farmers in the command area. Project funds would be usedto supplement agricultural research and staff training operations at theParwanipur Agricultural Experiment Station. NZIDB would make arrangementwith the Economic and Statistics Division of the Ministry of Food, Agricultureand Irrigation for providing monitoring of project benefits and carrying outeconomic evaluation of the project. A study of the feasibility of a pump-ing scheme to lift water from the Nepal Eastern Canal to irrigate areas withand adjacent to the Canal would be conducted by HMGN, with the assistanceof the Consultants.

H. Consultants

25. HMGN and the Department of Irrigation, Hydrology and Meteorologyhave a limited cadre of trained and qualified engineers to plan, design,prepare specifications, and supervise field construction. The shortageis, in part, due to staff assignment to other irrigation projects under

ANNEX 5Page 6

construction. A similar shortage of experienced staff exists for keypositions in project administration and the Agricultural Extension Service.Expatriate consultants would be provided under the project to assist NZIDBin the execution and management of the project works, to carry out feasibilitystudies and to train NZIDB staff (Annex 11).

january 23, 1973

ANNEX 6Page 1

NEPAL


Irrigation Water Demand and Supply

1. Climate. Annual rainfall, as given in Annex 2, is about 1,350 mm,90% of which occurs from May to October. Monthly average rainfall datarecorded at the Sirha station, about 100 km east of the project area, for thelast 19 years were used in the water requirement-supply calculations.

2. Crop Water Requirements, Estimates of water requirements for theprojected crop patterns were based primarily on two years of study at theHardinath Experiment Station. For paddy and wheat, the water requirementswere determined by field measurements including evaporation from "Class A"pan, crop consumptive use, and deep percolation losses for each 10-day periodduring the growing season. The crop coefficient thus determined was relatedto the growth stage of the crop. The requirements for land preparation andpuddling for paddy were assumed to be 150 mm. Crop coefficients and standardevaporation pan data were used to determine consumptive use for sugarcane,oilseeds and vegetables.

3. Using the Sirha station data, effective rainfall for paddy wascomputed for average 10-day periods as follows: (1) if the total rainfallwas less than 5 mm, none was considered effective; (2) if the rainfallexceeded 5 mm in depth, the excess was considered effective to a depthof 10 cm and all the excess over 10 cm was assumed to be wasted. Effectiverainfall for crops other than paddy was based on the average field holdingcapacity of 40% of effective root zone depth. Based on these criteria,the following table shows the percentage of monthly effective rainfallto total monthly rainfall:

Effective Rainfall (% of total for month)

Month Paddy Other Crops

May 80 80June 70 70July 50 40August 50 40September 80 70October 80 80

ANNEX 6Page 2

4. Water losses from the field outlet to the crop in the surfaceirrigation area were calculated at 20% for paddy and 25% for other crops.In the groundwater area, field losses were estimated at 5% for paddy,because of the canal lining and better control of water with pump irrigation,and 25% for other crops.

5. Water Supply-Surface Irrigation Area. Irrigation water for thesurface area would be diverted by a barrage located at the Nepal-India borderon the Gandak River and conveyed about 100 km through the Don Branch Canal,located in India, to the Nepal border and the Nepal Eastern Canal (seeMap 3895). These works were constructed by GOI and except for the NepalEastern Canal would be maintained by GOI. The Gandak River, with about35,000 km2 of watershed area entirely in Nepal, has a mean annual flow of1,534 m3/sec; monthly discharges vary from 4,570 m3/sec in August to 300 m3/secin March (based on 5 years data collected at Narayan Garh station).

6. Under terms of an agreement with India (Annex 1), GOI wouldprovide Nepal with a continuous flow of 24.1 m3/sec (850 cusec) waterinto the Nepal Eastern Canal, the main canal for this project. Itwill be necessary to close periodically the Don Branch Canal for maintenanceand repair purposes. HMGN and GOI would establish a subcommittee with theresponsibility for continuous inspection of the Don Branch Canal and thedetermination of the time and duration of closure for routine and emergencyrepairs and maintenance.

7. Barrages on the Tilawe and the Sirsia Rivers near Birganj providesupplemental irrigation from June to November for about 7,000 ha in theproject area. These systems would be incorporated into the project, improvedand provided with water for perennial irrigation.

8. Table 1 shows the monthly water demand and supply for the projectedsurface area crop pattern.

9. Water Supply-Groundwater Area. The hydrology for an area of about200 km2, including the project area, was studied by the UNDP consultants.The area (Map 1), bordered on the north by the Churia Hills, a sub-range ofthe Himalayas, is underlain by alluvial deposits to a depth of about 300 mand saturated with groundwater to within 3 to 5 m of the land surface.Three zones of aquifers were identified, each with different lithologic andhydrologic characteristics. Groundwater occurs under both confined andunconfined conditions.

10. Feasibility studies included: (1) an analysis of the flow dynamicsof the groundwater in the aquifer system to a depth of about 300 m; (2) adetermination of the water balance in the upper 150-200 m of the system;(3) analysis of the recharge and potential for development of the aquifersystem; (4) design, construction and operation of a digital model undervarious assumed conditions of development; (5) preparation of designs andspecifications for a two-phased groundwater development - a pilot projectphase and an ultimate phase; and (6) recommendations for additional studiesto be carried out during and subsequeit to development. The studies also

ANNEX 6Page 3

included drilling of test and production wells, aquifer testing, geophysicalsurveys, lithological and electric bore hole logging, topographic mapping,well inventory and chemical analysts of groundwater.

11. The principal aquifer to be developed by project wells is identifiedas layer 3. This aquifer, the most extensive of the three, has the greatesttransmissivity; although in some areas the aquifers are hydraulically inter-connected. The top of layer 3 ranges from 60 to 100 m below ground surface;it has a thickness ranging from 140 to 280 m. Tubewells supplied from thisaquifer would average about 150 m in depth. Recharge to the aquifer systemoccurs directly by infiltration of rainfall within the area and by lateralflow from the north. Water balance studies indicate that the annual averagerecharge is in the order of 50 million m .

12. Aquifer characteristics of layer 3 were determined by eleven pumpingtests. Transmissivity values ranged from 520 to 1,600 m2 /day, and theequivalent range of permeability would be 17.4 to 53.3 m/day. Specificcapacities of wells pumping from layer 3 aquifer ranged from 21 to 45 m3/h/m.Drawdown resulting from pumping was determined by the use of a digital com-puter model. The model included the entire 200 km2 and assumes that the baseof layer 3 is 150 m. A storativity value of 5 x 10-3 was used for layer 3aquifer. A sensitivity test, using a storativity value of 5 x 10,4 madeduring the visit of the appraisal team showed that the pumping lift at wellE19 would increase from 27.0 to 28.5 m during peak periods. Although storativ-ity values calculated during the pumping tests were weak, the sensitivitytest demonstrated that this is not a critical factor in the determination ofptumping lift.

13. The project would equip and energize 14 existing wells, drilledunder bilateral aid with the GOI, and construct and equip 14 new wells. Be-cause the existing wells are designed for maximum pump settings of 30 m, thepumping lift during peak operations could not exceed this figure. New wellswould be located in the well-field design in such a way that interference wouldnot cause pumping lifts greater than 27 or 28 m. The areas to be served byboth new and existing wells are shown on Map 2.

14. The existing wells would provide irrigation water for 75 ha each;the new wells, 120 ha each. This would require a discharge of 50 1/sec fromthe existing wells and 80 1/sec from the new wells in order to avoid operationof the pumps during peak demand time on the electric power system. Therefore,each well would be equipped with pumps and regulating reservoirs for automaticoperation during 19 of the 24 daily hours.

15. Table 2 shows the irrigation requirements of crops to be supplied bya well of 50 1/sec capacity and a well of 80 1/sec capacity.

August 9, 1972

NEPAL.

IROANJ IRRIATlO PROJECT

ESTIMATED CROP WATER REQUIREMENTS AT FULL DEVELOPMENT:SURFACE IRRIGATION SUBPROJECT

JAN FEB MAR APR 1 MY JUN JUL AUG SEP OCT NOV DEC

PADDY- EARLY _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

PADDY - LATE __ -~

SUGARCANE -EARLY m- i.uSUGARCANE- LUTE Q 0 -01EE01S PULSES&" OGETAS CDI

---d.. ~ ~ ~ ~ ~~~[1,08 1.22 1.39 1.10 D.UOop s,rr,iCtott E~~~~~~~~ ~~~~~~~~~~~~~~~~~~~~~ ~160 20 156.90 137.33 126CC 111.70

172.8 185.o 187.7 138.6 15.6J- P1 pe.Oit.O4 I-$ U.) 27 .9 86.0 77.5 65.1 82.5 28.0

00003 o ahbe pr-partoon 150.0 - -0recsv r.,rfahl ( 62.4 127.4 149 .5 150.0 123.2 49.6

F- Ar rcqg. 8(q,% ff. 115.5 129.1 113.4 102.8 97.9 21.0DI ,J t.. 0% ff on' 11*4.4 161.8 161.6 128.0 122.1 0.

D,UPeroI.o (hae 80) l.(e 180.5 202.2 177.2 160.6 153.0 37.5!V.ppI. art- -q -------- -- ----- ---------------- - - -14,350 h*--- ----- - --- - --

lot. no terreqd. ~~~~~~~~~~~~~~~~~~~~~~~~~ ~29.90 29.02 25.43 23.05 21.96 5.38

LI - PaddyCrop ontlietD 0.54 1.18 1.36 1.15 1.105 DO-

0k0 .VOpoOOtiUn (non) ~~~~~~~ ~~~~~~~ ~~~~~~~ ~~~~~~~160.20 151.90 137.33 126.0) 014.70 83.10Corn) ~~~~~~~~~~~~~~~~~~~~~'/ - ~~~~~~~~~~~~~ 86.9 179.2 186.8 182.7 166.3 33.1,

-p rrat flea m4)9.0 62.0 77.5 65.i 82.5 28.0 30.0-dbe ~Obdpe.(n 50.0 100.0 - -- -

.,C.13 (me,) ~~~~~~~~~~~ ~~~~~~ ~ ~~~~~~20.0 127.4 169.5 USO.0 1-23.2 I96 .ICCef. P.31. ... 'fl.e) ~~~~~~~~~~~ ~~~~~~~~~~~39.0 101.1 107.2 101.9 11,2.0 111.'7 63...)

Yldel. -oqt. 802 Uff. (eo) L18.8 126.6 134.0 127 .4 177.5 180. 79.3ereO 3.80% ~f -pd roi(26) I,. e,60.9 15B .1 167.5 159.2 221.9 226,1 99.1

lot. 4rOton reqd. tRe-' ~~~~~ ~~~~~ ~~~~~~~~~~~~~~6.1.2 15.27 16.83 99~I2 22.29 22.71 9.955

o-P lo,ffer i.nt KEe 0.83 25 - 3 0.30 1. 50'U, eeaeeration (one) ~~66.65 78.68 16316 36 8891 ~~~~ ~ ~~~~ ~~55.3 66.9 62.2 23.40 34.82ct.e rnUl (o)0.0 0.0 0.0 D. 0.1

lrrg-at-o r-qL.. (n 55.3 866 62.2 25.0 34.1"-r1c. 0091. 706 efO. () 79.0 L 95 6 B889 35.7 49.1

i0-,eorne eeqt,. 708 ff. () 1,12.9 136.6 127. 0 51.0 i70.Oe.. t~~~ton roqI. 4,-' 18.20 J 1~~~~l9.60 18-22 7.3--- ..... ,2 10.06

fror. onelfir~~~~~re So 6/ 0.60 ~~~~ 0 60 0.70 0.80 0.88 0.97 3.08 0.97 0.86 0.40 0.6 0.62Et: (oe)6.0 29.9 114.6 154.1 200.0 155.4 151.9 133.2 108.6 45.9 50.0 62.pa t e-ap -re lo (i)6.65 730 68 16 68 15.60 22.3 102 5.9 2.3 160 147 31 88Eleerorofol(n 0I.0 0 0 095 11" 3 0.i0 60.3 126.9 101.1 10O.., I108. 1. 48.0 0.0 C).0frp, - -eqt (en 00 I01 5. 139.7 28.5 47. 28.8 0.0 0.0 50.0 42.7

pore 10. req. 73% -f. .r'e) 57 .1 42.1 1.63.7 220.1 199.6 69o.7 68.3 11.1 0.0 2.0 71.L 91.0ro-erseo rot. 00% rI>. Cm) 81.6 80 2 233.9 321.5 280.1 58.2 97.6 58.8 0.0 0.0 110.0 87.11roppoie- (ha) , -- - ---------- 2,870 h ------ ------ ----- -- ----------- -- --

vol. sneer reqo. ,,,3 2.34 1 73 6 71 9.03 8.~~ ~ ~~~~~ ~ ~~~~ ~~~18 1.67 2.80 1.69 0.0 0.0 2.93 2.0

Mro -rofiio !" C).37 0.54 0.50 017900evp-a'ioo nn 66.65 73.68 i63,.68 68.8 62

-- .me) ~~~~~~~~~~21.7 39.8 81.8 U 7.oe -eranall L-r) 0.0 0.10 0.0 U.70-igorltion reqt. ( -) 21.7 39.8 81.8 11.70

-i e.rqe. 70% elf. ln) 35.2 56.8 116.9 16.7Ie ro. 0 ef. C.)50.3 81.2 167.0 2.

. -. to -r93. IV, 2.17 3.50 7.19 1i.0-3-

foo oleeane oi.8 0.1 2.8 21 I8.03 69.20 4656 5.06 40.73 46.25 28.09 20.20 13.59

.00,llOUIe ceipply otolize., 5 . 32.1 12.6 69.8 ~~~~~~ ~~~1J,.5 62.4 74.6 69.9 63 .2 70.9 43.6 32.6 21.

3, 0 O.OC1 prto (Et) for Pd obtoeod foam Hordipth Pilot Dw0t,onati-, fn.-.As,-., o ,. iOY 1 eCar-imh 0,106 3,o-otrat,ne Ceem and other arena

W.0IOB.ek-6523t2RI

NEPAL-MQ06 VOGATO PROJECT

ESTIMATED CROP WATER REQUIREMENTS FOR GROUNDWATER SUBPROJECT

JAN 05E MAR APR MAY JUN J L AUG 0EP OCI "OV DEC

P0LDY EARtLY - -- I * f _

e-1_ - mT-

WVOLAT{----'1-'4

SrGAOCANE EARtLy I 4 Efk n

Y.OA4CANE LATE 5. L,l.

&V VGETASLLES - _____ _____ _____ - IC;. .Yrf cr,o0' 1 08 1 22 1.37 1.10 OW,4

9.r. OV.705AV.>O) (.3 ~~~~~~~~~~~~~~ ~~~~~~ ~ ~~~16,020 I2 1519 13,733I 132600 1 701

SF0 ('~~~~~~~~~K 17302 I 18532 1~~~~~~~~~~~~~~~~~"K 32 36 188

211 84o0 77 5 65i2 So-dbd -no 1-d 5eAOO m?1.. 10 1

t .. u 6~~ ~~~~~~~~~~~~~2.4 1274 13.2 49.6Crop ,rr g-~~~tLT.reqt. (no) ~85.5 1l96 113371032297

'S V 00 ~~~~~ ~~~ ~~~~~ ~~~~~~~~ ~~~~~~~~~1069 10 13 6 129 03122

'5% (eff ) I12.5 170.(5 190 135.8 128.8 32.0

'i-," K, 1 ~~~~~ ~~~~~ ~~~~~~~~~~1.18 1.36 '1.4 .1

3s') ~~~~~~~~~~~~~ ~~~~~~~ ~~~~~~~ ~~~~~~86.51 179.24 186.77 182.70 166.32 33.40

oCtFVEra) do' I (no.) 20.~ ~~~~~~~~ ~~~~~~ ~~~~ ~~0 4.2.o 4.7.5 650.0 123.2 29.6 0(.

FTrL6 3

F 8 ~~~~ ~ ~~~~~~~~~~~ ~~~~~~~~ ~~29.0 91.1 107.2 101.9 14.o447 6.

'-58 ~~~~~~~~~~~~~~~~~~~. ~~~~~~36.3 101.4L 134.0 127. 4 177 190 793.438.0 106.7 160.1 i4i i6. 19044186

re 5~~~~~0-', (os) ~ (.8 0380.33 .50

V59900 00~~~~~~~~6.6 83.40 69C.82

Ht 55 32 66.88 62.20 ~~~~~~~~~~~~~~~~~~~~~~~~~~25.02 34.41

* 6' ~~~ ~oq (es.,) ~~55.3 9669 252 .0 34.4

o - Fe' "0 'C. (so) ';.~~110 95.6 88.9 2 I 35.7 49.

~4roL~r 5% r.(n 33'.2 100.6 93.5 137.6 51.7

~~ '~"f Er 1.60 0.40 0.70 0.80 0.8 0. 97 1.0 0.97 0.0 040 04 62

'090 F 01 (eo.) ~~~~~66.6 78.6 163.68 19z:60 227.23 140.20 -15.9 137.33 126.00 111'4.70 83.'40 68.82I55.3 15.9. 133.21 108.3 45.88 50.01 42.67

OorO.t.~~~ TOL'OALI (aS r ~~ 0 0 0 60.3 126.9 '0.1 10.1 10. 48.0o 0

op g.-' oro rq. (-). 473.0 5 31.5 114.6 1514.1 139:.7 28:5 47.8 28. 0 0- 50.0 o2

F'.~- ce rq. ?0% erf. (o 95.1 5. 0l '637 220.1 199.6 (63.7 68.3 41.i 71.4 61.0

I .5% ~ff. 60-1 47. I172.3 231.7 210.0 42.8 71.9 43.3 7. 42

"0 0O5psoAELOO (s-C 6' (~~~~~~ 'p8.68 16.6 68.82

Ft (so) 21,.) 42.49 0~~~~~~~~~~~~~~1.84 Li11.7

tFF'eotSve rororsil (to,) 0 0 ~ ~ ~~0 J TO'p L-T pt orr 50- 'e1 2. 2.5 81.8 (,13. 7

0.s0'71% TLf. 6;.)3 0.7 116.9 16.7

-iesne F95% fI Ii) 5 63.9 123.0o 19.6

400 3.&rspod y 0.042 0.063 0.055 O05e. 0.08 0 02

111W 2" 0.010 029 0.038 0.036 0.060 0.050 0.051 0.883

A'F,oF. ;Fo ~~~~~ ~~~~C I' 0036 0.034 0.014 0.039

Oroecc . I 0. 0.8084 0.014 0.019 0.017 0.0046 0.o06 0.003 0.006 0.005

VeOeS.o60eo ~~~~ ~~~~0 0> 0.04,7 ( 0.062 0.0.9 0~069 0.036 F.9 0.089 0. 0~98 0.063 0.043 6

fL'p '0 h3 I 0.10 783~ F..~ 0 2

-0 A~epply i L.ed 8 7S' 5 rr- -3rV7 =W7_ n*4

~ of Woton-r~5jo,o,o fse. TEes Wels lep'ja 1.20 h., (Xi) lis .3)

A .00550.. J ,~~~~~~~ ~~~~~~ ~~~~~~~ ~~~~~ 0.068 0.102 0.089 I 0.01 0.077 0.019

"F Y 0'9, "2C F o:i I0, F9 :5 0.Ols 0.080 0.035

~~ (1, o.05~~~ 0.016 0.04500.039 0031

12 ~~~~0.007 o.o00 F 06 0.028 0.02 5 , 0.005 0.009 0.005 0.009 0.008

0.00 ou1 3.02. - 0.003

- .01 An.00 0L0F50~~~~~~~ Ms ~C.i o I 0.0?6 . 0.099 F 0 028 0.100~ 0.152 017 0.14,2 0.155 0.G .6?7 .4

MV - 97'0, I '~~~~~~~~~~~ ~~~~~-C-h tM77 78!8r 030 27T? 58T 4.01 0.8 '804

~~~0 'OF '0.r CF,,ed 8 ~~~~~0' t~~5 FI~'~~' rrr 9 '-' 83- 47 7F"'_'*

9,r 13 f..r "Td tn bsr 90 !so 05A003009,10 1 hro/d60 ay jss.WO 62FF

NEPALBIRGANJ IRRIGATION PROJECT

CONSTRUCTION SCHEDULE

(With 0 & M and Agricultural Supporting Services)

WORK DESCRIPTION 1971 1972 1973 1974 1975 1976 1977 1978JFMA KP SO_N J,FMAAM|J JIAS NJF I SN_ .F I ND JOFNMD AAJO JFJA JJ SNN JA JJASONOJ F|M JJ SONO

I I I I I I j~ROJECT SAT I D|Y III II IIII IIIII IIII IIIiI Ii I| PROJECT ENDS,

Tender Doc--ets__,_p |on f._ E b.h _- | BRIDGING OPERATIO?

Preparo ton fo Estobfshmnc of

| re _ t Aot4.th-ty

o Land Acquistio

E Tender Caf11 & Coot-rt

O I Prouvement of Eqorpmn-f M-hf-i 1 1_Off ice & Oo-to- for P-ofe Stoffr M

Sne-dary Canal7290 cm

!t~~~~~~~~T, Xl~ i W_vt

<t -ulisi f Secohi n _ | | | | |- dar DrainD O&-Mnagow Fa-lt-Ie T-426k roninud

m2 rovemnt oI- f M- Cal f _- 62km

in Hood Surfacing 0ok'

Teiephr..e Li-es 50km

~ mrcmc f Ec-ting Tcke-11 14 -e11n

o rlrqadTestrr oftr- T.L-Inels 14 VilnIl

Con.. r Tank, Orat & ffeOted

0 ,-Troirrisr- Lion 18km

Hood Sv-f-,iri 10km

M-ntor rig of Preircf op-rtor--l & Ecurumc- etfr

Fecelkility RA-P.- for Lifilrlgin, -- Lift i 0105&PttetrgtnnPeet& F-tre Ir-g.t-a P-o1. te

0 Tech Atuvvrc nFriiri4 ch croot lir Cna-rel & LD-ir-

0 & Md if hr & Draiag Spvor ~ - Vrl-

Agricltrol Suppurliiru Aut-ruitrIc

Jo

-,'d E- 65306R

ANNEX 8

NEPAL

BIRGANJ IRRICzATION PROJECT

Detailed Cost Estimate and Expenditure Schedule-L

Local Foreign Toa 1976 1977 1978------------ (s$ million)--------------------

1. Surface IrrigationLand acquisition 1.00 - 1.00 0.25 0.25 0.25 0.25 -

Civil worksMain canal 0.20 0.15 0.35 0.09 0.09 0.09 0.08 -

Secondaries 0.17 0.06 0.23 0.02 0.06 0.06 0.06 0.03Tertiaries,& Drainage o.69 0.23 0.92 0.10 0.24 0.16 0.26 0.16Road surfacing 0.37 - 0.37 0.05 0.10 0.06 0.11 0.05

Sub-total 2.43 0.44 2.87 0.51 0.74 0.62 0.76 0.24

2. Tubewell IrrigationLand acquisition 0.05 - 0.05 0.04 0.01 - -

Well drilling 0.06 0.17 0.23 - - 0.13 0.10 -

Civil works 0.19 0.05 0.24 - 0.07 0.09 0.08 -Electric line 0.03 0.06 0.09 - 0.03 0.04 0.02 -

Equipment & spares 0.02 0.13 0.15 - 0.05 0.10 - -

Sub-total 0.35 0.41. 0.76 0.04 0.16 0.36 0.20 -

3. Consultant ServicesProject Implementation 0.23 1.30 1.53 0.20 0.38 0.38 0.38 0.19Feasibility Studies 0.07 0.40 0.47 0.06 0.12 0.12 0.12 0.05

Sub-total 0.30 1.70 2.00 0.26 0.50 0.50 o.50 0.24

4. AdministrationLand acquisition 0.05 - 0.05 0.03 0.01 0.01 - -

Civil worksBuildings 0.28 0.20 0.48 0.15 0.17 0.10 0.03 0.03Coop. stores 0.02 0.01 0.03 - 0.01 0.01 0.01 -

0M equipmnent - 0.54 0.54 0.02 0.23 0.23 0.06 -

StaffEng. & Admin-

istration 0.50 - 0.50 0.05 0.12 0.12 0.12 0.09Agr. Ext. & Coops. 0.15 - 0.15 0.02 0.03 0.03 0.04 0.03Supplies & Services 0.27 _ 0.27 0.03 0.05 0.05 0.08 0.06

Sub-total 1.27 0.75 2.02 0.30 0.62 0.55 0.34 0.21

5. On-Farm Developmentby Farmers 1.00 - 1.00 - 0.20 0.25 0.30 0.25

6. ContingenciesPhysical (10% 0.32 0.30 0.62 0.08 0.17 0.18 0.13 0.06Price (7%/yr.) o.49 0.36 0.85 - 0.13 0.26 0.29 0.17

Sub-total 0.81 o.66 1.47 0.08 0.30 0.44 0.42 0.23

Total 6.16 3.96 10.12 1.19 22 2.72 52 1.17

1/ This cost estimate does not reClect the devaluation of the United States Dollaron -ebnrary 12, 1973.

ANNEX 9

NEPAL


Estimated Schedule of Disbursement

IDA Fiscal Year Disbursement Cumulative Disbursementand Quarter During Quarter End of Quarter

----------------- US$ Million -------------------…

1974September 30, 1973 0.15 0.15December 31, 1973 0.15 0.30March 31, 1974 0.20 0.50June 30, 1974 0.20 0.70





1979September 30, 1978 0.15 5.90December 31, 1978 0.10 6.00

January 23, 1973

ANNEX 10Table 1

NEPAL


List of Vehicles and Equipment to be Purchased,Surface Water Area and 0 & M

Unit CostNo CIF Birganj Total Costs

Item Description Required US$ US$

1 Inspection Vehicles, longchassis, 4-wheel drive 4 4,000 16,000

2 Inspection Vehicles, regularchassis, 4-wheel drive 24 3,600 86,400

3 Pick-up Truck 3 4,000 12,0004 Small Trailers for use with

Inspection Vehicles 10 800 8,0005 Liglit Motor Cycle 25 400 10,0006 Bicycle 120 60 7,2007 Truck, 5-6 ton 5 9,000 45,0008 Truck with Cargo Boom, 7 ton 1 11,000 11,0009 Dragline, 3/4 cu yd with

accessories 2 38,000 76,00010 Farm Tractor 60 hp with land

levelling blade 6 7,500 45,00011 Ditcher (plough type) to be

attached to farm tractor 5 1,000 5,00012 Truck Crane, 3 ton 1 25,000 25,00013 Portable Air Compressor, with

pneumatic tools 2 7,500 15,00014 Pump 0 3" with accessories 3 400 1,20015 Pump 0 2" with accessories 6 300 1,80016 Concrete Mixer, 6 cu ft 2 2,500 5,00017 Portable Generator, 3 kw 1 1,200 1,20018 Portable Generator, 2 kw 2 800 1,60019 Workshop Equipment 1 lot 25,000 25,00020 Telephone System with Switchboard 1 lot 25,000 25,00021 Telemetering Equipment 1 lot 20,000 20,00022 Radio Transmitter-Receiver 3 2,500 7,50023 Miscellaneous Equipment and Tools 1 lot 22,100 22,100

TOTAL 472,000

24 Spare Parts for Vehicles (20%) 1 lot 35,00025 Spare Parts for Equipment (5-15%) 1 lot 33,000

GRAND TOTAL 540,000

January 23, 1973

ANNEX 10Table 2

NEPAL


List of Equipment to be Purchased

Groundwater Area

Unit CostNo CIF Birganj Total Costs

Item Description Required US$ US$

1 Electric Motors and SwitchGear - Existing Tubewells 14 1,500 21,000

2 Pumps and Spares for Motorsand Pumps (for existing

tubewells) 14 1,000 14,000

3 Electric Motors and SwitchGear - for 14 New Tubewells 14 2,000 28,000

4 Turbine Pumps and Spares forMotors and Pumps (for

new Tubewells) 14 4,500 63,000

5 Miscellaneous Equipment and Tools 4,000

TOTAL 130,000

July 3, 1972

ANNEX 11Page 1

NEPAL


Project Organization and Consultants

Organization and Staffing

1. ILMGN has recently established the Narayani Zone IrrigationDevelopment Board (NZIDB) under the Development Board Act of 1956, to beresponsible for the execution of the project and for its operation and main-tenance. A similar administrative arrangement is in use for the West German-assisted Gandaki Agricultural Development Project near Pokhara, the KankaiIrrigation Project assisted by the Asian Development Bank, and the HardinathAgricultural Development Project under a bilateral assistance from Japan.

2. The powers of NZIDB will be vested in an eight-member Board ofDirectors drawn from Government agencies but including the Project GeneralManager. The Board would formulate and direct the policy of the organization.A General Manager appointed by the Board would be the chief administrativeofficer and would be responsible for the organization, appointment, promotion,dismissal and designation of functions and duties of staff within the generalrules of the HMGN Public Service Commission. The Board would meet inKathmandu but the General Manager and project staff would be located inBirganj.

3. In addition to the construction, operation and maintenance of theirrigation facilities, NZIDB would be responsible for the agriculturalextension service in the project area. It would arrange with AMC for theprocurement and distribution of inputs, with the ADBN for agricultural credit,and with the Department of Agriculture for training and research at theParwanipur station. NZIDB would develop operational arrangements with othergovernment and private agencies as needed to execute the project. The pro-posed administrative organization chart is shown in Chart IBVD 6877 (R).

4. The Department of Irrigation, Hydrology and Meteorology has alimited staff and has had little experience in the design, execution andoperation of large-scale irrigation facilities. While a substantial numberof partially trained engineers are available they will need advice, guidanceand supervision by trained experts. With seven other major irrigation proj-ects under development, the Department lacks the expertise of key staffpersonnel to execute this project.

5. Manpower in Nepal is also available by transfer or direct hire tostaff the personnel requirements for the agricultural extension, coopera-tives and other aspects of the project. Some of the probable staff membershave had experience in these or other districts under the Intensive Agri-cultural Districts Program or the Rapti Valley Agricultural DevelopmentProgram. HMGN proposes to transfer a few experienced personnel from otherareas to execute this project.

ANNEX 11Page 2

6. Other international agencies are currently prcviding li1GN wite six.expatriate consultants at least through FY 1974, to assist the HFMGN ataff atfParwanipur with its research, extension staff training annx field testiyagcum-demonstrations on farmers' fields in the project area. Also, the ADENhas expatriate assistance from the Asian Development Bank to help train Itsmanagers, accountants and farm planners for cooperatives, includtng tioseproposed for the project. USAID has provided and plans to continue to -ro-vide technical assistance to AMC for its wholesale and retail farm inputdistribution functions and to AMC and ADBN for the design and constructionof farm service center stores and on-farm grain storage structures.

7. However, to achieve the project objectives it wiI1 be necessarv toengage consultants to assist NZIDB about as follows:

ANNEX 11Page 3

Birganj Irr. FeasibilityProject Studies Total

Administration

Advisor to General Managerand Head of Consultants Team 48 48

Administrative and Financial Expert 36 4 40

Engineering Services

Irrigation Engineer 48 21 69

Civil (Structural & Contract) Engineer 36 10 46

Construction Supervision Engineer 48 48

Mechanical & Electrical Engineer 12 12

O&M and On-Farm Development Engineer 42 6 48

Hydrologist 6 2 8

Hydrogeologist 12 12

Master Driller 18 2 20

Surveyor 24 6 30

Draftsman 24 8 32

Agriculture

Agronomist 12 2 14

Agricultural Extension Specialist 30 30

Others

Economist 3 5 8

Other Short-Term Specialists 18 4 22

Total 417 70 487

ANNEX 11Page 4

Terms of reference for the consultants are given at the end of thisAnnex.

Project Execution

8. NZIDB intends to begin as soon as possible the active managementand execution of the civil works and equipment procurement aspects of theproject. To enable this action to progress rapidly the UNDP continued itswork on the project under a "bridging" operation until July 1972 to providethe design and drawings, specifications and civil works contract tendersfor Block 1 of the surface water command area. The goal would be to startconstruction as soon as the credit becomes available.

9. Weather would enable selected works to be constructed after earlyOctober. However, the labor supply is fully employed with the harvesting ofpaddy and sugarcane and the planting of wheat until early December. Becauseof these conditions most of the heavy construction works can be performedfrom about December to June. All of the civil works are expected to belabor-intensive.

ANNEX 1 1PAge 5

NEPAL


Draft Terms of Reference

I. Objectives

1. Consulting services are required by the Narayani Zone IrrigationDevelopment Board of His Majesty's Government of Nepal to provide:

(i) the plans, designs, specifications, tender documents andconstruction supervision for the completion of irrigationfacilities and buildings in the Birganj Irrigation Project(hereinafter referred to as the "Project"). The projectis in Parsa and Bara districts in the Terai plain andcomprises two subprojects: a surface water irrigationsubproject covering a net area of 28,700 ha commanded bythe Nepal Eastern Canal, and a groundwater subproject witha net area of 2,700 ha, contiguous to the surface water area;

(ii) advisory services to the Project Board in its management,accounting, on-farm development, agricultural extensionservices and cooperatives;

(iii) feasibility reports for (a) a pumping scheme to liftwater from the Nepal Eastern Canal to irrigate an area northof the Canal, and (b) a second irrigation project suitablefor international financial assistance to be selected byHMGN and the Association.

2. The Board would provide appropriate full-time professional ortechnical personnel to act as counterparts and to work with the consultant'sstaff. During the course of the consultant's undertakings the counterpartprofessional and technical personnel would be trained and guided in theirperformance by the consultants.

3. Consultant services would be provided for a five-year period endingJune 30, 1978.

II. Responsibilities of the Consultant

A. Mapping and Survey

4. The Consultant shall perform the following:

ANNEX I 1Page 6

(a) prepare maps of the project area on a scale of 1:2,500with 0.25 m contours;

(b) stake on the ground the alignments of all secondary andtertiary irrigation canals, drainage canals and serviceroads with permanent benchmarks at appropriate intervals;

(c) carry out staking survey to demarcate the boundaries oflands to be acquired by HMGN for the construction of allcanals;

(d) prepare all maps and survey drawings to be used for planningdesign and land acquisition.

B. Engineering Services for Surface Irrigation Area

5. The Consultant's responsibilities shall include:

(a) planning and design of new structures and improvement ofexisting structures in the Nepal Eastern Canal;

(b) planning and design of secondary and tertiary canals, drainagecanals and all the structures therein down to the field turnoutfor each service unit of 30-40 ha;

(c) planning and design of on-farm development works to suit thevarious topographic characteristics of lands for the commandarea of each service unit;

(d) planning and design of all service roads, office buildings,staff quarters, stores and other structures related to theproject;

(e) preparing drawings, specifications and tender documents for thepurpose of international competitive bidding;

(f) preparing bill of quantities and cost estimates for the aboveworks;

(g) assisting the Board in the issuance of invitation to bidand on the evaluation of bids received and making recom-mendations for award;

(h) supervising construction of all works in the subprojectincluding inspection of materials used, measurement ofcontractors' works and certification of contractors' vouchers;

(i) preparing O&M manuals of the project and its major structuresfor the Board.

ANNEX 11Page 7

C. Engineering Services for Groundwater Area

6. The Consultant's responsibilities shall be as follows:

(a) resiting some of the new tubewells further north on landthat cannot be irrigated by low lift pumps from the NepalEastern Canal, if the pump scheme study mentioned inparagraph F.10(a) shows that the scheme is technically andeconomically better than tubewell irrigation;

(b) preparing detailed specifications and tender documents suitablefor use by the Board in international competitive bidding forpumps, motors, switch gear and appurtenant works for the 14existing wells and 14 new wells and having received the tenders,assisting the Board in the evaluation of same and making re-commendations for award;

(c) supervising the installation and testing of equipment to insureproper performance;

(d) preparing designs and specifications suitable for internationalcompetitive bidding for construction of: (i) regulatoryreservoirs with appropriate inlet and outlet works and controldevices; (ii) main canals to be staked on the ground from eachwell to the service units for each of the 11 (eleven) existingwells not so provided and for each of the 14 new wells to beconstructed; and (iii) pumphouse and other structures relatedto the subproject. After having received the tenders, theConsultant would assist in the evaluation of same and makerecommendations for award;

(e) preparing designs, specifications and tender documents for useby the Board for approximately 18 km of 11 kv power line toserve both existing wells not now served and new wells; havingreceived the tenders, the Consultant would assist in evalua-tion of same and make recommendations for award;

(f) preparing detailed designs, specifications and tender documentsfor construction of 14 new wells suitable for internationalcompetitive bidding and having received the tenders, assistingin the evaluation of same and making recommendations for award;

(g) providing a master driller to supervise the construction,testing and development of 14 new wells;

(h) planning and designing on-farm development works for the commandarea of each tubewell;

(i) collecting hydrogeologic data as required to calibrate a digitalgroundwater model for use in analyzing the ultimate developmentof groundwater irrigation in the study area;

ANNEX 1 1Page 8

(j) advising in the operation of the tubewells and monitoring ofdata on costs and benefits suitable for use in evaluatingfeasibility of ultimate groundwater development of theregion;

(k) preparing a manual for the operation and maintenance of thetubewells; and

(1) collecting data and information on investment, operationand maintenance costs of tubewells and their distributionsystems, benefits accrued from such irrigation and use theseinformation to update the feasibility report on groundwaterirrigation (Feasibility Report of a Combined Surface andGroundwater Project in the Birganj Area and Annex V attachedto the Report) in the 20,000 ha north of the Nepal EasternCanal.

D. Administrative and Agricultural Advisory Services

7. The Consultant shall assist and advise NZIDB and its General Managerin the general administration of personnel, finance, accounting and auditingand in the operation of the project as an integrated agricultural developmentproject including agricultural extension and cooperative services.

E. Training

8. The Consultant shall prepare and submit to NZIDB within six monthsof appointment proposals for a comprehensive training program for adminis-trative, professional and technical counterpart staff engaged on the Proj-ect. After its approval the Consultant shall be responsible for implementa-tion of the training program.

9. The program should give detailed consideration to the trainingrequirements in the fields of engineering, agriculture and administration.The following subjects fall within the respective fields:

(a) Engineering: Planning, design, drawing up of specifi-cations, cost estimation, surveying and mapping, construc-tion supervision, material testing, O&M procedures, relatedmechanical, electrical and other engineering works;

(b) Agriculture: Irrigation agronomy, soil surveying, exten-sion techniques, cooperative organization, farm budgeting,agro-economic surveys and other related agriculturaldevelopment activities; and

(c) Administration: Management techniques, finance, accounting,budgeting, personnel management, records, stores, publicrelations, land acquisition and contracts, etc.

ANNEX 1 1Page 9

F. Feasibility Studies

10. The Consultant shall prepare:

(a) A feasibility study and report for a pumping schemeto lift water from the Nepal Eastern Canal toirrigate an area north of the Canal; and

(b) a feasibility study and report for a second irrigationproject sditable for international financial assistanceto be selected by HMGN and the Association.

III. Reporting

11. The Consultant shall prepare and submit to the Board the monthlyprogress report giving a description of the Consultant's activities andpersonnel during the reporting period, progress of the various phases ofproject works, the Board's activities, problems encountered and measures toovercome these problems and Consultant's financial statement.

12. The Consultant shall assist the Board in the preparation of theBoard's quarterly report, semi-annual report and annual report for submissionto the lending institution.

IV. Undertaking of H.M. Government of Nepal

13. Providing that established procedures are followed the Governmentshall:

(a) exempt or bear the cost of, any taxes, duties, fees, leviesand other impositions imposed under its laws and regulationsor the laws and regulations in effect in its territoriesor of any political subdivision or agency thereof, on theConsultant and his personnel (other than personnel who arecitizens or permanent residents of Nepal) in respect of:

(i) any payments made to the Consultant or to such personnelin connection with the carrying out of the agreed toservices;

(ii) any equipment, materials and supplies brought intoNepal for the purpose of carrying out the services andwhich, after having been brought into such territories,will subsequently be withdrawn therefrom;

(iii) any property brought into Nepal by the personnel of theConsultant and his dependents for their personal useand which, after having been brought into Nepal will

ANNEX 1 1Page 10

subsequently be withdrawn therefrom upon departure ofsuch personnel; however, to qualify for these exemptions,shipment of such property will have to be arranged bycontract no later than 3 months after the arrival of thestaff member;

(b) facilitate prompt clearance through customs of any equipment,material and supplies required for the services and of thepersonal effects of the Consultant's personnel;

(c) ensure that the Consultant's personnel and their dependents arepromptly provided with any necessary entry and exit visas, resi-dence permits, exchange permits and travel documents requiredfor their stay in the territories of the Government;

(d) issue all necessary permits and authorizations for the carryingout of the services;

(e) provide reasonable furnished family living quarters acceptableto the Consultant;

(f) provide full-time professional or technical personnel to becounterparts and to work with and to be trained by each consultantin carrying out these services;

(g) make available to the Consultant all existing aerial photographs,maps, drawings, data, reports, and any other information per-tinent to the execution of the contract;

(h) provide office space equipped with necessary furniture andutilities such as water supply and electricity in the projectarea or in Birganj;

(i) provide all local transport facilities and equipment required bythe Consultant;

(j) provide the Consultant with the available maps and materialsas follows:

(i) maps of the project area of a scale of 1:20,000 with1 ft contours made in 1964 by Survey of India;

(ii) aerial photographs of the project area of an approximatescale of 1:35,000 taken during November-December 1968,together with original films, and uncontrolled photo-mosaics of 1" to 1 mile scale;

(iii) aerial photographs of the project area of an approximatescale of 1:12,000 taken in November 1971 together withoriginal films; and

ANNEX 11Page 11

(iv) feasibility report of the Birganj Irrigation Project,August 1971, by Nippon Koei, together with accompanyingmaps, drawings and diagrams.

(k) provide the Consultant with available maps, aerial photo-graphs and reports pertinent to the studies mentioned inparagraph F.(10)(b).

V. Necessary Procedure to be Followed byInvited Consulting Firms

14. Consulting firms invited to submit proposals are requested tostate clearly in their proposals the following:

(a) terms and conditions under which they would carry out theduties and responsibilities specified above; financial termsare not desired at this stage;

(b) the proposed composition of the team which they intend toassign to the project both in the field and at the home office,number of man-months of each individual together with thename and qualification, including proficiency in spoken andwritten English;

(c) a list of vehicles and equipment which they anticipate wouldbe required in the carrying out of their works; and

(d) the category and number of counterpart personnel and otherlocal staff which they would wish the Government to provideto work with them at no cost to them.

January 23, 1973

ANNEX 12Page 1

NEPAL


Irrigation, Electricity and RelatedWater Resources Act, 1967 1/

Preamble:

Whereas it is expedient to regulate the use of such importantnational wealth as rivers, streams, lakes, falls and underground waterresources in order to maintain the convenience and economic welfare of thepublic,

And whereas it is expedient to insure the development of electricityin a proper manner by regulating its output and supply, and to confer rightsand facilities for its production and supply,

And whereas it is expedient to make necessary provisions inrespect to irrigation in order to insure its development in a proper manner,

Now therefore, His Majesty King Mahendra Bir Bikram Shah Dev hasenacted this law on the advice and approval of the National Panchayat.

1. Short Title, Extent and Commencement

(1) This law may be called the Irrigation, Electricity and RelatedWater Resources Act, 1967.

(2) It shall be applicable throughout the Kingdom of Nepal.

(3) It shall come into force on the date prescribed by HisMajesty's Government by notification in the Nepal Gazette.

2. Definitions

Unless repugnant to the subject or context, in this Act: -

(a) Water Resource means rivers, streams, lakes and fallsas well as any other natural reservoir and undergroundwater prescribed by His Majesty's Government bynotification in the Nepal Gazette from time to time.

(b) Electricity means power to be generated from water,coal, diesel oil or any other resource.

(c) License means the license granted under this Act.

1/ Nepal Gazette, Vol. 17, No. 29A (Extraordinary), Kartik 6, 2024(October 23, 1967), as translated by Nepal Press Digest (Private) Ltd.

ANNEX 12?age Z

(d) Licensee means the person who obtains license underthis Act. This term includes any individual,Panchayat or any other corporate body obtainingrights under this Act or the rules framed hereunder.

(e) Consumer means the person who is supplied withwater or electricity by a licensee.

(f) Water Cess means the water cess to be levied onconsumers under this Act.

(g) Charges mean the charges to be collected fromconsumers under this Act as the price of electricity.

(h) Prescribed or as prescribed means prescribed or inthe manner prescribed in the rules framed or ordersissued under this Act.

3. Use of Water Resources

(1) No person shall be permitted to utilize any water resourcewithout obtaining license under this Act.

But no license need be obtained for utilizing anywater resource for any of the purposes mentioned below: -

(a) For meeting daily personal needs,

(b) For operating wind-mills for cottage industrypurposes,

(c) For operating water-mills or irrigation channels,

(d) For irrigating lands through underground waterby means of tube-wells,

(e) For drawing water for irrigation purposes fromgullies, aqueducts or streams, ponds, wells, lakes,canals or dams through the labor and resources ofthe local people themselves either individually orcollectively, in such a manner that no adverseeffect is created on any hydro-electric, or irrigationproject of His Majesty's Government constructedbefore or after the commencement of this Act, or thoseproposed to be constructed in the future.

(2) Notwithstanding anything contained in Sub-Section (1),in case any person has obtained any right to use anywater resources in accordance with the current Nepallaw prior to the commencement of this Act for any purposeother than those mentioned in the restrictive clause ofSub-Section (1), he shall obtain a license within a

ANNEX 12Page 3

period of one year from the date on which the appropriatewater resource is declared as a water resource under thisAct. In case he fails to obtain a license in thismanner, his right shall be deemed to have ipso factolapsed.

4. Production and Supply of Electricity

(1) No person shall generate, supply or conduct surveys forelectricity without obtaining a license under this Act.

(2) Notwithstanding anything contained in Sub-Section (1)and Section 4 (sic), all licenses issued under the 1963Nepal Electricity Act, prior to the commencement of thisAct and existing at the time of its commencement shallbe deemed to have been issued under this Act, and shallaccordingly remain valid.

But electricity to be generated or supplied under suchlicense shall be generated and supplied subject to theprovisions of this Act and the rules framed or orderspromulgated ...................

5. License

(1) Any person desirous of utilizing any water resource forpurposes other than those mentioned in the restrictiveClause of Sub-Section (1) of Section 3 shall submit anapplication in the prescribed form containing the followingparticulars to the prescribed authority: -

(a) Full name, address and occupation of the applicant,

(b) Volume of water sought to be utilized, and thepurpose of utilization thereof,

(c) The area where the water is to be utilized, and theplace where the utilized water is to be released,

(d) A pledge to abide by current Nepal law and theconditions stipulated in the license, and

(e) Other particulars as prescribed.

(2) Any person desirous of generating or supplying electricityshall submit an application in the prescribed form con-taining the following particulars to the prescribed authority: -

(a) Full name, address and occupation of the applicant,

(b) The area where electricity is to be generated orsupplied,

ANNEX 12Page 4

(c) Volume of electricity sought to be generated orsupplied,

(d) Particulars of how electricity is intended to begenerated or supplied,

(e) A pledge to abide by current Nepal law and theconditions stipulated in the license, and

(f) Other particulars as prescribed.

(3) In case any person desires to conduct a survey of any waterresource or of the production, supply or transmission ofelectricity, he shall submit an application in the prescribedform containing prescribed particulars to the prescribedauthority.

(4) In case the prescribed authority so deems appropriate afterscrutinizing the application filed under Sub-Section (1),or Sub-Section (2) or Sub-Section (3) as the case may be,and after conducting inquiries regarding the financial,technical or any other aspects of such application, if sonecessary, he may issue a license in the prescribed formto the applicant.

(5) Licenses issued under this Act: -

(a) Shall not be sold or otherwise alienated withoutthe permission of the prescribed authority.

(b) May be suspended, revised or revoked by theprescribed authority if it so becomes necessaryin the public interest, or if the licensee violatesany of the conditions stipulated in the license, orany provision of current Nepal law.

(6) Every person obtaining a license under this Act shall paysuch charges and annual fees to His Majesty's Governmentas may be prescribed.

But exemption from the payment of such fees or chargesmay be granted to prescribed persons in prescribed circum-stances.

Acquisition and Requisition by His Majesty's Government

(1) His Majesty's Government may acquire any electric andirrigation installation and related equipment againstcompensation, if it so becomes necessary for thepurpose of making large-scale and comprehensivearrangements regarding electricity and irrigation.

ANNEX 12Page 5

(2) The amount of compensation to be paid under Sub-Section(1) shall be determined on the basis of the currentvalue of the land, building and equipment acquired(after deducting depreciation caused by breakage andordinary use).

(3) Canals, dams, electric installationo, any other construc-tion project and related lands and equipment acquiredunder this section may be operated by His Majesty'sGovernment itself or be handed over to any other personfor operation with or without selling the same to him.

(4) In case His Majesty's Government is satisfied that anylicensee has not been able to operate regularly andsystematically any water resource or electricity worksfor which he has obtained license, it shall requisitionsuch water resource or electrical installation along withthe related lands and equipment, and operate the sameitself or have it operated by any other person until itbegins to run regularly and systematically.

7. Water Cess, Electricity Charges and Other Fees

(1) The licensee may impose and collect water cess, electricitycharges or any other related fees from consumers.

Provided that the approval of His Majesty's Governmentshall be obtained before imposing and collecting such cesscharge or fee.

(2) For the purpose of Sub-Section (1), His Majesty's Governmentmay form a Committee including representatives of consumersand the concerned industrialist to advise it in mattersrelating to the grant of approval for water cess., electricitycharges and other fees.

8. Utilization or Acquisition of Lands or Property Belonging to Others

(1) His Majesty's Government, or the licensee with theapproval of His Majesty's Government may acquire landsbelonging to others for any of the following purposesas specified in his license: -

(a) Construction of dams or embankments,

(b) Construction of lands or irrigation channels,

(c) Laying of pipelines on the surface or underground,

(d) Establishment of reservoirs or water supply centers,

AN4NEX 12Page 6

(e) Construction of electricity generating centers,transmission centers, conversion centers or supplycenters,

(f) Installation of electric poles,

(g) Installation of overground or underground electriccables or lines, and

(h) Any other necessary construction works.

(2) Any person authorized by His Majesty's Government or bythe licensee may enter into any land for any of thepurposes mentioned in Sub-Section (1), or for inspectionor maintenance of the works constructed thereunder.

(3) His Majesty's Government or the licensee with the priorapproval of His Majesty's Government may prohibit the usefor any purpose of lands situated in the area where anyconstruction project mentioned in Sub-Section (1) is underimplementation, or of lands situated at a prescribeddistance on either side of such area.

(4) In case any land is acquired by His Majesty's Governmentor the licensee under this section, reasonable compensationtherefor shall be paid to the concerned land-owner.

(5) In case it becomes necessary to enter into any residentialbuilding for purposes mentioned in Sub-Section 1) or (2),this shall be done only after giving advance notice to theoccupant.

But it shall not be necessary for the prescribedauthority to give advance notice under this Sub-Section ifit becomes necessary to conduct search of any house onreasonable suspicion of misuse or pilferage of water orelectricity or to avert any accident.

9. Power of His Majesty's Government to Utilize Water Resourcesor Generate and Supply Electricity not to be Affected

(1) No provision contained in this Act shall be deemed tohave affected the power of His Majesty's Government todevelop any water resource or electricity directly.

(2) His Majesty's Government may distribute or sell wateror electricity developed from any water resourceunder Sub-Section (1) directly or through any otheragency or individual.

ANNEX 12Page 7

10. Inspection

His Majesty's Government may depute inspectors to ascertain whetherthe provisions of this Act and the rules framed hereunder, or the terms andconditions stipulated in the license, are being observed or not.

11. Power to Issue Directives

His Majesty's Government may issue necessary directives to anylicensee in the public interest, or for making proper arrangements for thedevelopment of water resources, or for generating and supplying electricity,and it shall be the duty of such person to comply with such directives.

12. Appointment of Advisors

His Majesty's Government may appoint advisors according to needto advise it in any matter concerning the enforcement of this Act.

13. Penalties

(1) In case any person takes any action in contravention of thisAct or the rules framed or orders or directives issued here-under, he shall be punished with a fine ranging from Rs 5.00to Rs 500.00, and in case such person is a licensee, HisMiajesty's Government may suspend or revoke his license, ordirect the stoppage of any work connected with water resourcesor production and supply of electricity, if it has been donewithout obtaining any license.

(2) In case any person will-fully causes any damage or loss to anycanal, dam or any construction work relating to water resources,or to any electric installation or related equipment belongingto any licensee, or steals water or electricity being suppliedby His Majesty's Government or by such person, or misuseswater or electricity in such a manner as to put His Majesty'sGovernment or such person to loss, or attempts to do any ofsuch things, or in case he obstructs any action or operationmentioned in Section 9, he shall be made to pay the necessarycosts, and, in addition, be punished with a fine of anequivalent amount or with imprisonment for a term notexceeding 6 months or with both.

14. Power to Frame Rules

(1) For the purpose of implementing the objectives of thisAct, His Majesty's Government may frame rules orpromulgate orders, and such rules or orders shall bedeemed to have come into force on the date on which theyare published in the Nepal Gazette.

ANNEX 12Page 8

(2) Without prejudice to the generality of the power conferredby Sub-Section (1), His Majesty's Government may framerules or promulgate orders particularly in respect tothe following matters: -

(a) Form of applications to be submitted forobtaining licenses, and the particulars to begiven therein,

(b) Authority empowered to receive applications forlicense,

(c) Form of license, and related charges, annual feesand other matters,

(d) Quality and standard of water to be supplied,

(e) Standard of canals, dams and any other constructionwork related to water resources, and the processof generating, supplying, transmitting and utilizingelectricity, and the terms and conditions in respectthereto,

(f) Standard of materials and equipment to be utilized inthe construction of any canal or dam, and in any otherconstruction project connected with water resources,and in the production, supply and transmission ofelectricity, and the process of utilizing such materialsor equipment,

(g) Duties and powers of inspectors,

(h) Miatters pertaining to water cess,

(i) Matters pertaining to electricity charges,

(j) Accidents and inquiries thereinto,

(k) Period for which a license is to remain valid,and the renewal, revision or cancellation thereof,

(1) Provisions for prevention of harmful effects ofsurvey, control and utilization of waterresources and of the use of water,

(m) Provisions for preventing the contamination ofwater,

ANNEX 12Page 9

(n) Provisions regarding water wasted in the courseof utilization for industrial, commercial orother purposes, and

(o) Other necessary matters.

15. Repeal

(1) The following Nepal laws have been repealed: -

(a) Irrigation Act, 1961.

(b) Nepal Electricity Act, 1963, and

(c) Electricity, Motor or Power (Transfer and Removal)Act, 1961.

(2) Other current Nepal laws which conflict with this Actshall be deemed to have been repealed to the extent ofsuch conflict.

(3) The liabilities and rights of the Nepal ElectricityBoard constituted under the laws repealed under Sub-Section (1) shall accrue to His Majesty's Governmentafter the commencement of this Act.

July 3, 1972

ANNEX 13

NEPAL


Farm Incomes

Farm incomes from crop production were analyzed for typical 0.5ha, 2.0 ha and 5.0 ha farms irrigated from surface water, and for a 2.0 ha

farm irrigated from groundwater sources. The farm budget tables, whichare designed primarily to show "with project" and "without project" incomes

(in cash and kind) of representative farms in the project area, are presentedin Tables 1 through 4. The farm budgets have been estimated using the fol-

lowing assumptions and bases:

(a) Farm income includes only income from crop production anddoes not take into account livestock and cash earningsoutside of own farms or from non-agricultural employment.

(b) Farm production was valued at an average farmgate post-harvest price received for each commodity in recent years.Over 70% of the marketed surplus is sold during the firstthree months after harvest and prices are determined byboth domestic and nearby Indian markets because most ofthe marketed surplus foodgrain is sold in the neighboringIndian states.

(c) Input costs per ha are presented in Table 5, and themonthly labor requirements for the model farms are esti-mated on the basis of 50 man-days per family per month.

February 12, 1973

ANNEX 13Table 1

NEPAL

BI1GANJ IRRIGATION PROJECT

1/Farm Budget for Typical 0.5 ha Farms-l

Without Project With ProjectPro- Pro-duc- duc-

Area Yield tion GVP Area Yield tion GVP

TV (kg/ha) Tk (NR) (ha) (kg/ha) ( (N R

Wet Season Crops

Paddy - Local 0.45 1,800 810 610 0.15 2,800 420 315Paddy - HYV 0.30 3,700 1,110 835

Dry Season Crops

Wheat 0.25 1,300 325 290 0.30 3,250 1,055 875Pulses 0.05 500 25 25 0.10 800 80 80Vegetables 0.05 6,ooo 300 v 24Q 0.05 12,000 600 480

Total Farm Income 1,165 2,585

Production Costs ----------------- NRs ----------------------------

Seed 50 75Fertilizers 40 220Plant Protection - 135Bullock Expenses 60 70Hired Labor - _Land Tax 35Other 10 5

Total 195 195 590 590

Net Income 970 1, 995

Incyemental Income 1,025

Project Charges 120

'Net Incremental Income 905

Project Charges as % ofTncremental Income 12

1./ Farm production valued at farmgate price.

ANNEX 13Table 2

NEPAL

BIIzANJ IRRIGATION PROJECT

Farm Budget for Typical 2.0 ha Farms-/

Without Project With Projectrro- -- rro-duc- due-

Area Yield tion GVP Area Yield tion GVPT (kg/ha) 7kg (-NRS) TE (kg/ha) (kg (NRs)

Wet Season Crops

Paddy - Local 1.8 1,700 3,o60 2,295 1.0 2,700 2,700 2,025Paddy - HYV 0.7 3,500 2,450 1,835Sugarcane 0.1 0.2

Dry Season Crops

Wheat 0.6 1,200 720 650 1.0 3,000 3,000 2,s700Oilseeds 0.1 400 40 65 0.1 750 75 120Pulses 0.1 500 50 50 0.1 850 85 85Vegetables 0.1 6,ooo 600 480 0.1 12,000 1,200 960Sugarcane 0.1 18,000 1,800 235 0.2 40O,O00 8,000 1.040


Production Costs ------- NRs ----------------------------

Seed 185 300Fertilizers 170 870Plant Protection 5 500Bullock Expen §es 250 350Hired Labor ! 200 300Land Tax 140 160Other 150 300

Total 1,100 1,100 2,780 2,780

Net Income 2,675 5,985

Incremental Income 3,310

Project Charges 480

Tet Incremental Income 2,830

Project Charges as % ofIncremental Income 15

1/ Farm production valued at farmgate price.2/ Based on monthly labor requirements shown in Table 5, assuming family labor supplies

50 man days per month.

ANNEX 13Table 3

NEPAL


Farm Budget for Typical 5.0 ha Farms2'

Without Project With ProjectPro- Pro-duc- duc-

Area Yield tion GVP Area Yield tion GVP7 h kg7h7a T (ig;) (h (kg/ha) 7g R-sr)

Wet Season Crops

Paddy - Local 4.0 1,650 6,600 4.,950 2.5 2,600 6,500 4,875Paddy - HYV 1.0 3,400 3,400 2,550Sugarcane 0.5 1.0

Dry Season Crops

Wheat 1.0 1,100 1,100 990 2.0 2,800 5,600 5,040Oilseeds 0.3 400 120 190 0.3 750 22 360Pulses 0.3 500 150 150 0.3 850 255 225Vegetables 0.1 6,ooo 600 420 0.1 10,000 1,000 800Sugarcane 0.5 18.,000 9,000 1,170 1.0 40,000 40,000 5,200

Total Fann Income 7,870 19,050

Production Costs ------------------------------NTR ----------

Seed 500 760Fertilizers 470 2,130Plant Protection 150 1,175Bullock Expenses and Tractors 1,300 1 700Hired Labor 2/ 1,410 3,430Land Tax 350 405Other 400 765

Total 4,580 4,580 10,365 10,365



Project Charges 1,200

Net Incremental Income 4,195

Project Charges as % ofIncremental Income 22

1/ Farm production valued at farmgate price.2/ Based on monthly labor requirements showm in Table 5, assuning tamily laDor supplies


ANNEX 13Table 4

NEPAL


Farm Budget for Typical 2.0 ha Farms with Tubewell Irrigation

Without Project With ProjectPro- Pro-duc- duc -

Area Yield tion GVP Area Yield tion GVPT(a (kg/ha) Tv (NRI) (ha (kg/ha) (kg) JNRs)

Wet Season Crops

Paddy - Local 1.8 1,700 3,060 2,295 0.7 2,700 1,890 1,420Paddy - HYV 1.0 3,500 3,500 2,625Sugarcane 0.1 0.2

Dry Season Crops

Wheat 0.6 1,200 720 650 1.0 3,300 3,300 2,970Oilseeds 0.1 4Co 40 65 0.1 750 75 120Pulses 0.1 500 50 50 0.1 850 85 85Vetetables 0.1 6,000 600 480 0.1 12,000 1,200 960Sugarcane 0.1 18,000 1,800 235 0.2 40,000 8,000 1,040


Production Costs-NRs-

Seed 185 320Fertilizers 170 960Plant Protection 5 545Bullock Expenp es 250 350Hired Labor?! 200 1,250Land Tax 140Other 150 335

Total 1,100 1,100 3,760 3,760



Project Charges 6ho

Net Incremental Income 2,135

Project Charges as % ofLncremental Income 23

1/ Farm production valued at farmgaTe price.2/ Based on monthly labor requirements shoT.;m in Table 5, assming family l&bor supplies


NEPAL


Basic Inputs Per liectare for Various Crops

Paddy-Local Paddy-HYV Sugar Cane Wheat Oil Seeds Pulses Vegetables

W w w w W W W W W W

Cash Itputin NR6

Seed 45 45 100 - 300. 400 110 100 45 25 45 25 2 2

Fertilizer 195 50 295 - 675 360 320 50 50 50 50 50 50 50

Plant Protecticn 250 - 300 _ 115 30 - - 50 - 50 - 50 -

Others 250 200 350 500 300 150 80 150 80 150 80 150 80

TOTAL CASH INPUTS 740 295 1,045 _ 1,590 1,090 580 230 295 155 295 155 252 132

Labor IAnuts(in ma-days)

January 55 60 19 6 14 7 7 7 50 40

February 130 80 9 2 7 7 7 7 15 10

March 110 60 21 14 7 7

April 60 30 19 9

May 22 22 22 -

June 38 38 42 - 15 10

July 30 16 35 - 15 10

August 16 12 25 -

September 2 - 5 - 7 14 25 20

October 18 12 25 - 15 4o 2 14 7 7 14 50 40

November 12 10 16 - 15 40 18 15 14 14 14 14 50 40

December 15 _ 25 16 7 14 21 7 50 40

TOTAL TABOR InDJTS 138 110 170 - 430 330 113 62 63 56 70 56 240 19O

I With Project.j Without Project.PBullock expenses, farm equiyment ard Fctorace, etc.

ANNEX 14Page 1

NEPAL


Economic Rate of Return and Sensitivity Analysis

A. Economic Rate of Return

The economic rate of return from the project is estimated at 21.4%a.The investment costs and incremental net benefit streams are presented inTable 1. The rates of return from the two subprojects, surface and ground-water irrigation, are estimated at 24% and 14X, respectively. If sunk costswithout interest are included in first project year expenditure, the projectrate of return would be 14%, and for the subprojects 14% and 11%, respectively.Assumptions and bases of the economic rate of return calculation include:

(a) a 50-year life for the surface irrigation works anda 30-year life for the groundwater installations;

(b) the investment cost stream includes capital investment,physical contingencies, land acquisition for construc-tion and on-farm development works by farmers (estimatedcost US$1 million), together with the operation andmaintenance costs of the irrigation system which areestimated at NRs 80/ha for the surface system andNRs 160/ha for the groundwater system;

(c) because of the existing caste system a part of the poten-tial labor force is unavailable for agricultural employment.On the average, the available labor force is estimated tobe about 50 man-days/farm family per month. For the proj-ect area as a whole, the monthly labor supply is about onemillion man-days. The estimated monthly demand for agricul-tural labor in the project area under "with" and 'without"project conditions is given in Table 2. Clearly the availablesupply is considerably more than the existing requirementsfor much of the year and would continue to be so even afterthe completion of the project works. Full employment condi-tions prevail only during the month of June under "without"project conditions and in June and July under "with project"conditions. Accordingly, all labor inputs were priced at thegoing market wage rate of NRs 5.00 per man-day during theabove peak periods and at a shadow rate of NRs 1.00 perman-day during the rest of the year;

ANNEX 14Page 2

(d) economic benefits from the agricultural output (Table 3)were evaluated at 1980 world market prices, provided bythe IBRD Economics Department, adjusted to farmgatevalues as follows:

NRs/Ton

Paddy 650Wheat 700Sugarcane 100Oilseeds 1,000Pulses 1,000Vegetables 800

(e) yields under the without project conditions are assumed toincrease by 1% per year, a rate equivalent to that prevailingin the area during recent years. This increase would takeplace up to full development (year 15) of the project andyields in ton/ha for individual crops are presented in Annex 3.

B. Results of SensitivityTests

Aossmptions Economic Rate of Return

(a) The basic run excluding sunk costs 21.4 /1

(b) Including sunk costs of US$5 million(without interest) in the first yearinvestment 14.0 /2

(c) 20% increase in construction costs 18.0

(d) 2-year delay in project completion 19.0

(e) Combination of (c) and (d) 16.0

(f) 20% of reduction in benefits 17.0

(g) Combination of (c), (d) and (f) 14.0

(h) Replace increased wheat area of 6,200 hawith oilseeds and pulses (paras 6.02and 7.05) 18.0

(i) All labor costed at zero 26.0

(j) All labor costed at NRs 5 per man-day 16.0

/1 24% for surface irrigation and 14% for groundwater irrigation.

/2 14% for surface irrigation and 11% for groundwater irrigation.

February 12, 1973

ANNEX 14Table 1

NEPAL


Economic Analysis

Cost and Benefit Flows

Year Costs Benefits- US$ 000----------

1 1,1902 2,438 160

3 2,583 9904 2,402 8705 1,243 1,3706 274 1,8507 274 2,2208 274 2,5109 274 2,740

10 274 2,94011 274 3,11012 274 3,25013 274 3,34014 274 3,40015-31 274 3,42032 930 3,42033-50 274 3,420

Internal rate of return: 21.4%.

February 12, 1973

ANNEX 14Table 2

NEPAL


Estimated Aggregate Labor Requirement'000 man-days

Month With Project Without Project

January 582 235

February 595 183

March 675 248

April 486 132

May 646 622

June 1,219 1L089

July 996 468

August 595 339

September 173 31

October 815 539

November 858 594

December 561 247

T 0 T A L 8,201 4,727

N B PAL

BIP.'AHJ IROIGATION PPOJECT

Economic Analysis - Net Value of Production at Full Development

Paddy-Local Paddy_HYV Sugar Cane Wheat Oil Seeds Pulses 'Vegetables

Crop

With (W) or Without (W) Project W W W W W W W X W W W W

Yield (Tons/ha) 2.7 1.7 3.5 - 40.0 18.O 3.0 1.2 0.75 0.4 0.85 0.5 12.0 6.o

Price (NRs/Ton) 650 650 650 - 100 100 700 700 1,000 1,000 1,000 1,000 800 800

Gross Value of Production (NWs) 1,755 1,100 2,275 - 4,000 1,800 2,100 840 750 400 850 500 9,600 4,8oo

Production Costs excluding labor (NRs) 740 295 1,045 - 1,590 1,090 580 230 295 155 295 155 252 132

Net Return (NRs/ba) 1,015 805 1,230 - 2,410 710 1,520 610 455 245 555 345 9,348 4,668

Cropped Area (ha) 15,430 28,260 13,910 - 3,140 1,570 15,700 9,420 1,570 1,570 1,570 1,570 1,570 1,570

Net Return from Crop edArea (million OTs) 15.7 22.7 17.1 - 7.6 1.1 23.9 5.7 0.7 0.4 0.9 0.5 14.7 7.3

With Without

12 (Million 5) (Million NRs)Nct Returas from Project Area 80.42q" 37.7

Imputed Labor Cost

PeaR Labor 11.1 5.4

olri-Peak Labor 0t0 3.6

Totel Labor Cos. 17.1 9.0

Net r>eurrs from Projectl Ares 63.3 28.7

Project Benefits at Full Developrnent 34.6 (us$3.42 m)

I 3iee Annex 13, Table 5./2 a'b, not coete3./ -Be.oice of tOe rourA off eerGr, ito figes r.ay nolu EIree ea stly.

NEPALBIRGANJ IRRIGATION PROJECT

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Documents

World Bank Document · anteCY MEQUIVALENTS-US$1.00 -Nepalese Rupees (NRs) 10.125 NRs 1.00 m US$0.0988 NRs 1 million - US$98,765 WEIGHTS AND MEASURES (METRIC SYSTEM) 1 hectare (ha)