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In pursuance of the agreement between His Majesty’s Government of Nepal(HMG/N) and the Government of the People’s Republic of china signed on October 1, 1978,  the contract was signed on January 7, 1982 (Poush 23, 2038) between HMG/N Department of Industry and China National Complete Plant Export Corporation to establish Lumbini Sugar Mills at Sunwal, Nawalprasi According to this contract the Chinese side was responsible for the design of the factory, providing all machinery and equipments as well as construction and building materials, constructing the factory buildings and installing machinery and equipments, training local manpower and operating the mills during trial operation.


Similarly, the Nepalese side was responsible for procuring land, construction outside the factory  compound, supply of electricity and water, land scaping, gardening and beautification, making arrangements for clearing and forwarding the materials and equipments supplied from China to the factory site. The Nepalese side was also responsible for making all arrangements to construct the residential quarters for the staff and workers and overall management off the sugar mills.