Nepali government and the World Bank signed two agreements on Friday in Nepali capital Kathmandu, amounting to 109.2 million U.S. dollars to boost the nation's development, especially in energy and agriculture sectors, local newspaper The Himalayan Times reported on Saturday.

Nepali finance secretary Rameshore Khanal and World Bank Country Director for Nepal Susan Goldmark inked the agreement, which will provide 89.2 million U.S. dollars in addition to aid package for the Power Development Project that will help implement the Energy Crisis Management Action Plan in Nepal.

Another US$20 million have been allocated for the implementation of the Project for Agriculture Commercialization and Trade (PACT).

Nepal is in the midst of an unprecedented energy crisis that has had a negative impact on all aspects of the economy. A "national energy crisis" has been declared in light of last winter's acute shortfall of power.

"It is clear that chronic power shortages will continue to be a defining feature of life in Nepal for several years to come. The World Bank is stepping up its assistance to help Nepal minimize economic impacts and hardships in the short-term as well as to implement medium to long-term development plans," said Goldmark.

"In the absence of a concerted scale-up of both grid-supplied and off-grid power, Nepal will continue to be burdened by a heavy reliance on costly, and often polluting, alternative means for meeting the demand for electricity," she explained. The additional financing will include investments in rehabilitation of the Kali Gandaki-A Hydro Electric Plant (HEP) -- the biggest in the country-- as well as two existing thermal plants in Duhabi and Hetauda.

It will also finance construction of the 220KV Bharatpur-Bardaghat transmission line, strengthen the old and severely overloaded distribution network in the Kathmandu Valley and expand the government's off-grid micro-hydro rural electrification program.

These investments are intended to strengthen the nation's power system by increasing energy production through reduction of down-time at the Kali Gandaki-A HEP and make available an estimated 22 MW in the existing thermal plants.

The PACT aims to improve the competitiveness of small farmers and agribusinesses in 25 districts, out of the country's 75 districts.

Agriculture, which is predominantly subsistence, contributes 38 percent to the nation's Gross Domestic Product (GDP). In a globalized world, agriculture faces several challenges like market orientation, trade promotion and plenty of investment. The PACT plans to help farmers and cooperatives in profitable market oriented production and improve access to markets through technology and information services, critical public infrastructure and linkages to agri-business.

At present, the World Bank is financing 16 projects in Nepal, whose cumulative worth is around US$916 million.

(Xinhua News Agency August 22, 2009)