Kathmandu. The government has decided to establish Irrigation Management Company Limited to operate new mechanized irrigation projects.

The meeting of the Council of Ministers held on Monday approved the proposal of the Ministry of Energy, Water Resources and Irrigation to establish the company. The government, provincial and local governments will hold majority shares in the company.

Various agencies of the government, concerned provincial ministries, local levels, farmers of the concerned area, financial institutions related to agriculture, ÷industrialists and Nepal Electricity Authority will invest in the company. The company will be established by the Ministry of Energy, Water Resources and Irrigation. The business nature of the company will be service providing and productive.

With the government’s investment and assistance from the Asian Development Bank (ADB), the new mechanized irrigation project will construct five hundred deep tube wells in Rautahat and Sarlahi districts in the initial phase.

Minister for Energy, Water Resources and Irrigation, Physical Infrastructure and Transport, and Urban Development Kulman Ghising said that the project would provide irrigation facility to 22,500 hectares of land and help increase production through agriculture commercialization. He added that the service could be expanded to other districts and regions as per the need and demand.

The estimated cost of the project is 160 million US dollars (approximately Rs 22.4 billion). Of this, the government has invested Rs 4.93 billion. The ADB will provide assistance of Rs 17.47 billion. Out of this, Rs 2.10 billion is a grant and the rest amount is concessional loan.

The Company will be responsible for providing irrigation facilities through the single and combinatorial use of surface and ground water resources, making customer agreement with farmers, determining the terms of distribution of water and irrigation tariff, collecting and developing irrigation system, providing training to farmers and building capacity of the company.

The authorized capital of the company will be Rs 3 billion. The authorized capital has been divided into three crore units of ordinary shares of Rs 100 each. The current issue capital of the company will be Rs 2 crore. The company will have 85 percent promoter shareholders and 15 percent ordinary shareholders.

The promoters have agreed to pay the paid-up capital immediately to Rs 1.70 crore. 15 percent of the issued capital of Brar has been set aside for the general public. Among the promoters, the Ministry of Energy, Water Resources and Irrigation has 11 percent (Rs 2.2 million), the Ministry of Finance, Agriculture and Livestock and Nepal Electricity Authority (Rs 20 million each÷), the government of Madhesh Province has 15 percent (Rs 3 million), the local levels of Rautahat and Sarlahi have 2 percent (Rs 5 million) and the Agriculture Development Bank will have 2 percent share.

Under the IPO category, the agriculture entrepreneurs of the concerned districts will have 5 percent (Rs 1 million) and the farmers÷water consumers of the project will have 10 percent (Rs 2 million) share.

The company will have a seven-member board of directors. There will be a representative from the Ministry of Energy, Water Resources and Irrigation (towards irrigation), Director General of the Department of Irrigation, a joint-secretary level employee from the Ministry of Finance and Agriculture, one representative each from the provincial government, local levels of Rautahat and Sarlahi and farmers users÷user ÷committee. The Chief Executive Officer÷Managing Director shall act as the member-secretary of the company.