| Agreement Between the
Government of India and His Majesty's Government of Nepal
for Development of Irrigation, Drinking water Supply and Power
Kathmandu, 4 March 1959
His Majesty's Government of Nepal (hereinafter
referred to as H.M.G. and the Government of India :
Being desirous of co-operating with each
other in promoting the development of Minor Irrigation and
Power and Water Supply in Nepal have agreed as follows :
(1) This agreement is in addition to,
and does not derogate from the agreement entered into between
the H.M.G. and the Government of India on the 14th July,
1954 (hereinafter referred to as 1954 agreement). The projects
falling within the purview of the 19 , 54 agreement and
mentioned in the Schedule to this agreement will continue
to be governed by the terms of that agreement except that
the execution of works shall now be entrusted to the Canals
and Drinking Water Supply Board. All new works falling within
this agreement will be governed by this agreement.
(2) The Government of India agree to provide
further financial assistance of Rs. 50 Lakhs to H.M.G. for
the implementation of the development of Irrigation and
Power and Water Supply in Nepal (hereinafter called the
Programme) in conformity with the provision of the agreement.
(3) The Programme aims to take up the
implementation of the projects costing not more than Rs.
12 Lakhs each, for the development of Irrigation, provision
of drinking water supply and the establishment of small
power plants limited to 100 K.W. capacity in Nepal. These
limits may be relaxed in suitable cases in consultation
with the Director, Indian Aid Mission.
(1) The Programme will be implemented
through a Board called Canals and Drinking Water Supply
Development Board (hereinafter called the Board) which has
been constituted by His Majesty's Government under the Development
Board's Act 2213. If H.M.G. at any time during the continuance
of this agreement desires to dissolve the Board, H.M.G.
will obtain the advice of the Director, Indian Aid Mission
(hereinafter referred to as Director, I.A.M.), as to the
consequential measures to be taken in relation to the works
(2) The Director, I.A.M., shall act as
Adviser to the Board, and shall be invited to attend all
its meetings; and in his absence he may nominate any other
officer of IAM to attend the meetings of the Board on his
(3) In particular, the Board shall, before
taking a decision thereon, obtain the advice of the Director,
IAM on the size and location of Projects, annual budgets
and formation and introduction of administrative financial
and procurement procedures.
(4) The members and officers of the Indian
Aid Mission will be technical advisers to the Board in their
(5) The Board shall set up an office of
the Chief Accounts Officers to assist the Board in framing
financial and accounting rules and to maintain proper accounts.
The Government of India will lend the services of one or
more Account Officers to advise and assist the Chief Accounts
The financial assistance from the Government
of India will be utilised :
(i) For the purchase of stores, equipment,
vehicles and machinery required in connection with the Programme;
(ii) For meeting the expenditure on salaries,
allowances and travelling expenses on staff employed by
the Board referred to later, specifically for the execution
of the Programme;
(iii) For meeting the cost of personnel,
including one or more Accounts Officer, obtained from India
to advise and assist in the execution of the Programme;
(iv) For meeting cost of training local
staff for manning the subordinate services; and
(v) For meeting the expenditure incurred
on construction of works in connection with the execution
of the Programme.
(1) H.M.G. will supply timber, sand, stone,
limestone, and such other raw materials as may be necessary
free of royalty for the requirements under the Programme.
(2) H.M.G. will acquire land for construction
(3) H.M.G. will meet all the expenditure
on maintenance and repairs on all completed works.
(4) H.M.G. will appoint an Audit Agency
to complete a full cycle of audit at least once every year,
and also carry out the final completion audit within six
months from the date of the completion of the project. The
audit charges will be borne by His Majesty's Government.
(1) The expenditure on purchase of any
stores, equipment, vehicles and machinery through the Government
of India under Item (i) and the cost of personnel under
item (iii) of Article III will be paid for by the Government
of India and debited to the aid funds under this Agreement.
(2) To meet the other items of expenditure,
the Director, Indian Aid Mission, will advance funds to
the Board in instalments. Such advances shall be paid to
an account to be opened in the Nepal Rastra Bank in the
name of the Canal and Drinking Water Supply Development
Board. These funds shall not be mixed with similar other
funds from other agencies. Contributions of H.M.G. may include
funds received from other agencies.
(3) The account will be opened with an
initial deposit of rupees seven lakhs, consisting of a permanent
advance of rupees four lakhs and the first instal nent of
rupees three lakhs. Further advances will be made on the
basis of certificates rendered by the Board which will be
supported by an expenditure report from the Chief Accounts
Officer of the Programme to the effect that 75% of the amount
of the last instalment (excluding the permanent advance)
had been expended for the purpose for which it was given.
The permanent advance of rupees four lakhs will be adjusted
in the final instalment to be paid under the Agreement.
(4) The Board shall forward to the Director,
Indian Aid Mission, returns of expenditure in the prescribed
proforma by the first week of the second month following
the month to which it pertains. H.M.G. of Nepal will further
provide the Director, Indian Aid Mission, with full and
complete information relative to such programmes, including
the information necessary to evaluate the need for assistance,
and statements as requested on the use of assistance received.
(1) H.M.G. will provide foreign exchange
needed for purchase of machineries, materials, stores, equipment
and vehicles for the project from countries other than India
against the allotments made in Indian Currency by the Government
(2) The procurement of stores, equipment,
and other necessary machinery will be the responsibility
of the Board, but the Director, Indian Aid Mission will
if possible render assistance in this respect when approached
by the Board.
(1) All equipment, stores, machinery,
vehicles and live-stock, left over on completion of the
Programme, will be used only for the purpose of development
of Irrigation and Power and Drinking Water supply.
(2) All unspent balances, after meeting
the liabilities, of cash advanced by the Government of India,
shall be refunded to the Government of India on completion
or determination of this Agreement.
All commodities financed by the Government
of India in pursuance of the Programme shall enter into
Nepal free of import licensing requirements and of payment
of any customs duties or any other direct or indirect levy
aimed at the fact of importation or movement, sale or use
of goods in Nepal.
In the event of legal action arising from
activities undertaken in pursuance to this Agreement, H.M.G.
will assume.full responsibility for the defence of such
action in Nepal, and will take responsibility for assuring
execution of projects undertaken pursuant to this Agreement,
and will assure immunity, from garnishment or any otherlegal
process, of title to all such contributions or property
H.M.G. will make necessary security arrangements
for the protection of the personnel as also the materials
at various sites of construction and operations during the
implementation of the Programme.
This Agreement shall come into force with
effect from its signing and remain in force upto the 31st
March, 1961, unless determined earlier by either party giving
three months notice.
IN WITNESS WHEREOF, we, the undersigned,
being duly authorised by our respective Government have
signed the Agreement.
DONE at Kathmandu in Nepali and English
languages, in two copies each of this 4th day of March,
For His Majesty's Government of Nepal
For the Government of India
Sd- H. LAL DIRECTOR
INDIAN AID MISSION,
SCHEDULE OF PROJECTS
REFERRED TO IN ARTICLE I OF THE AGREEMENT.
S.No. Name of Work.
1. Water Supply (a) 260 hand pumps in
Terai and 40 in Valley (b) 1 hand pump in Mahottari (c)
50 hand pumps in Kailah (d) 2 hand pumps in Parsa District
(e) Additional two hand pumps in Parsa District (f) 50 hand
pumps in Valley
2. Pokhara Water Works 3. Panchmane Water
Works 4. Arnlekhganj Water Works 5. Satang Darang Water
Works 6. Phale Bash Water Works 7. Karki Manthali Water
8. Balambu Water Works near Mata-Tirtha.
1. Mahadeo Khola 2. Tika Bhairab Canal
3. Lower Vijaypur Project 4. Budhanil Kanth Canal 5. Tinao
Project 6. Jhaj Canal 7. Phewatal Bund 8. Baglung Irrigation
Project 9. Phalebash Irrigation Project
10. Ashe Khola Kulo.
Bilateral Treaties & Agreements (Volume 3)