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ADB Helps Nepal Prepare Melamchi Water Supply Project

Preparations for a project to bring water to Nepal's Kathmandu Valley from the Melamchi River will be partly financed by a US$5 million equivalent technical assistance (TA) loan approved today by the Asian Development Bank.

Only half of the Kathmandu Valley's water needs are met during the dry season and the situation is getting worse as the area's population is growing at a rapid 4.5 percent per annum. A proposed Melamchi Water Supply Project will provide an extra 170,000 cubic meters a day for the two million urban residents in the Valley and should satisfy demand until the year 2015.

Kathmandu Valley includes Nepal's three major cities of Kathmandu, Lalitpur and Bhaktapur. Due to deforestation in the catchment areas, there is a rapid runoff of rainfall during the short wet season and an acute shortage of water during the longer dry season. In addition, layers of clay impede the natural recharging of groundwater during the wet season.

Following the TA loan, the proposed US$270 million Melamchi project will be ready for consideration by potential financiers. The proposed project will include a 28-km tunnel, a hydropower plant, a water treatment plant and distribution facilities. It is hoped the project will be ready for execution by 2000.

The TA loan will provide the overall project management for the first 18 months. In addition, it will finance the detailed design and preparation of tender documents for the bulk distribution component of the project. It will also fund a pilot project to test the artificial recharging of groundwater in the Bishnumati and Manohara river sites.

The total cost of the technical assistance is US$6.75 million. The ADB's concessionary loan will come from its Asian Development Fund (ADF), which means it is interest-free, repayable over 40 years, including a 10-year grace period, and carries a service charge of one percent per annum. Approval of the loan is subject to the condition that the loan shall be signed when sufficient financial resources are available for the ADF. The Government of Nepal will provide US$1.75 million equivalent.

The Ministry of Housing and Physical Planning will be the executing agency for the TA loan.

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