The government has decided to establish Irrigation Management Company Limited to operate the latest mechanical irrigation project. The proposal to set up the company, put forward by the Ministry of Energy, Water Resources and Irrigation, was approved by the Cabinet in its meeting on Monday. The company will have majority shares held by the Government of Nepal, provincial governments, and local authorities.

Various bodies of the Government of Nepal, the concerned provincial ministries, local levels, farmers of the related areas, financial institutions connected with the agricultural sector, industrialists and businessmen, and the Nepal Electricity Authority will invest in the company.

The company will be established by the Ministry of Energy, Water Resources and Irrigation. The nature of the company’s operations will be service-oriented and productive. With government investment and assistance from the Asian Development Bank (ADB), five hundred deep tube wells will initially be constructed in Rautahat and Sarlahi through the utilization of underground water resources under the latest mechanical irrigation project.

From this, irrigation facilities will be provided to 22,500 hectares of land, contributing to increased production through agricultural commercialization, said Minister of Energy, Water Resources and Irrigation, Physical Infrastructure and Transport, and Urban Development Kulman Ghising. He mentioned that the service could be expanded to other districts and regions based on need and demand. The estimated cost of the project currently being implemented in the two districts is 160 million USD (around NPR 22.4 billion), of which the government has invested NPR 4.93 billion.

ADB will provide assistance amounting to NPR 17.47 billion, including NPR 2.10 billion in grants and the remaining amount as concessional loans. The company will provide irrigation services through the use of surface and underground water resources, either individually or in combination. It will sign customer agreements with farmers, determine and collect water distribution conditions and irrigation fees, develop, operate, maintain, and replace irrigation systems, and provide training to farmers to enhance their capacity, among other responsibilities.

The company will have an authorized capital of NPR 3 billion. This authorized capital has been divided into 30 million ordinary shares, each valued at NPR 100.

The company’s initial issued capital will be NPR 20 million. Eighty-five percent of the company will be owned by founding shareholders and 15 percent by ordinary shareholders. The capital the founders have agreed to immediately pay up is NPR 17 million. The amount equal to 15% of the issued capital has been reserved as ordinary shares for the general public.

Among the founders, the Ministry of Energy, Water Resources and Irrigation will hold 11% (NPR 2.2 million), the Ministry of Finance, the Ministry of Agriculture and Livestock Development, and the Nepal Electricity Authority will each hold 10% (NPR 2 million each). The Madhesh Provincial Government, related to agriculture and irrigation, will hold 15% (NPR 3 million), while the local governments of Rautahat and Sarlahi will hold 25% (NPR 5 million). The Agricultural Development Bank will have a 2% share (NPR 0.4 million).

Under ordinary shares, agricultural entrepreneurs from the concerned districts will hold 5% (NPR 1 million), and farmer–water user committees from the project-benefiting areas will hold 10% (NPR 2 million).

The company will have a seven-member Board of Directors. It will include the Secretary of the Ministry of Energy, Water Resources and Irrigation (Irrigation Division), the Director General of the Department of Irrigation as a representative of the Government of Nepal, one Joint Secretary-level official each from the Ministry of Finance and the Ministry of Agriculture, one representative from the Provincial Government, one representative from the local governments of Rautahat and Sarlahi, and one representative from the farmer user-consumer committees. The Chief Executive Officer/Managing Director will serve as the member-secretary of the company.

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