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ADB grants $15m loan package
KATHMANDU, DEC 19 - Asian Development Bank (ADB) has approved a US$ 15 million loan package to support institutional reforms to improve the delivery of water supply and wastewater services to Kathmandu Valley.
According to a press release issued by the ADB Headquarters Manila, the loan consists of a program loan component of US$ 5 million to support institutional reforms including the restructuring of Nepal Water Supply Corporation (NWSC).
"It will set up three key water bodies– Water Authority (WA), Water Utility Operator (WUO), and National Water Supply Regulatory Board (NWSRB) – to be responsible for policy setting, operation and management of water systems, and regulatory functions to protect consumer interests, respectively," the release has stated.
The Kathmandu Valley Water Services Sector Development Program aims at establishing an institutional framework and operational environment that will pave the way for providing efficient and affordable water supply and wastewater services.
The second component of the loan is the project loan of $10 million for a six years period. "This will support for the performance-based management contract and related advisory consulting services, and bring in computerised billing and accounting systems," the release adds.
Current piped-water supply demand in the valley, including unaccounted-for water, is estimated at 150 million litres per day. However, in the dry season, production capacity reaches only between 65 and 85 million litres per day and falls short of needs even in the wet season.
The management contract will be for an initial period of four years from December 2004, extendable upon satisfactory performance by an additional period of about two years. "Indicators to judge performance will include the supply of water of a potable standard, at adequate pressure, and, ideally on a 24-hour basis," Mr. Tamaki adds.
A differentiated tariff schedule will be proposed under which customers who receive a reliable and improved level of services will be charged a higher tariff. "An increase in tariffs will be needed to cover the immediate costs of operating and improving services," the release adds.
The ADB loans come from its concessional Asian Development Fund, with the program loan having a 24-year term and the project loan a 32-year term, both including a grace period of eight years.
Interest for both is 1 percent per year during the grace period and 1.5 percent per year afterwards. The Government will contribute about $5 million, which will be generated by the WUO by means of improved tariff revenues, toward the total project cost of $15 million.Posted on: 2003-12-20 01:56
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