Kathmandu, 2 November 1964
His Majesty's Government of Nepal, hereinafter called ‘H.M.G.’ and the Government of India, hereinafter called ‘the G.O.I’;
BEING desirous to co-operate with each other in promoting the development of irrigation facilities in Nepal;
HAVE agreed as follows :
1. The G.O.I. agree to provide financial assistance to the extent of Rs. 4 crores (Rs. four crores only), Indian Currency, out of
the overall aid funds made available by India to Nepal, for the construction of the Chatra Canals Project. This amount will be utilised
before the 3lst March, 1966.
2. The Chatra Canals Project aims at the provision of irrigation facilities in the district of Morang through the construction of
necessary headworks for drawal of water from the Kosi river at Chatra, the main canal and distributaries, necessary cross drainage
works and such other works which may be deemed necessary by H.M.G. and the G.O.I. in mutual consultation.
3. The G.O.I. will arrange for the execution of the Project through the River Valley Projects Department of the Government of Bihar,
hereinafter called ‘the River Valley Projects Department.’ The River Valley Projects Department may employ on the Project staff
deputed by H.M.G. The G.O.I. also agree to provide suitable training facilities in the Project for the engineering staff deputed
to the Project by H.M.G.
4. A four-member Committee, consisting of two representatives of H.M.G. and one representative each of the River Valley Projects
Department and the Director, Indian Aid Mission, Nepal, will be set up to review the progress of work from time to time.
5. H.M.G. will provide the needed land for the Project and shall arrange the supply of timber, sand, stone, limestone and other
raw materials, free of royalty, for the requirements of the Project. It is, however, agreed that the G.O.I. will make an ad hoc
contribution out of total amount mentioned in paragraph 1 above, to reimburse H.M.G. with the cost of acquisition of land needed
for the Project. Such a contribution will be limited to Rs. 25 lakhs (Rs. twenty five lakhs only), Indian Currency.
6. H.M.G. will also ensure that the goods, materials, equipment, machinery and transport brought into Nepal, or moved from one place
to another within Nepal, are exempt from all duties, taxes, cesses and import-licensing requirements. The exemption shall also extend
to the India-based personnel working for the Project. The principles and procedures regarding the facilities to be extended to the
Indian contractors and exemption, from import and export duties and other local levies, of all supplies, materials, equipment and
vehicles, etc. imported for contract work, as worked out between the Director, Indian Aid Mission, and H.M.G. for the Trisuli Hydel
Project will apply mutatis mutandis to the Chatra Canals Project.
7. H.M.G. will provide foreign exchange in amount not exceeding Rs. 13 lakhs I.C. for the implementation of the Project.
8. H.M.G. will make the necessary security arrangements for the protection of the personnel as well as materials, equipment etc.
at the, various sites of construction and operations during the implementation of the Project.
9. In the event of legal action arising from activities undertaken in pursuance of this Agreement, H.M.G. will assume full responsibility
for the defence of such action in Nepal, and will take responsibility for ensuring the execution of the Project, and will assure
immunity, from garnishment or any other legal process, of title to all contributions covered by this Agreement or property derived
10. H.M.G. will take over the Project works on completion as certified by the River Valley Projects Department and undertake to
make provision to keep them in proper maintenance and repair.
11. Any expenditure incurred by the G.O.I., before the signing of this Agreement in pursuance of the implementation of the Project
shall be eligible for being debited to the overall aid under this Agreement.
12. The Project will be debited with the depreciation in value of the construction equipment, machinery, vehicles etc. used on
the Project. If H.M.G. require to retain in Nepal any of the construction equipment etc., for maintenance of the Project, this
shall be subject to a separate agreement that might be arrived at in this regard.
13. This Agreement comes into force with effect from the date of signing and will remain in force upto the 3lst March, 1966, unless
terminated earlier by either party, giving 3 months notice.
In WITNESS THEREOF, we, the undersigned, being duly authorised by our respective Governments, have signed the Agreement.
DONE at Kathmandu in the English language in four copies this second day of November, 1964.
For His Majesty's Government of Nepal
BHEKH B. THAPA
Ministry of Economic Planning.
For the Government of India
Indian Aid Mission, Nepal.