ADB Provides $202.5M to Improve Water Supply in Bangladesh's Capital City

MANILA, PHILIPPINES (10 December 2007) - The Asian Development Bank (ADB) is providing $202.5 million to improve water supply services in Bangladesh’s capital city of Dhaka to promote better health conditions and contribute to sustainable economic growth.

The Dhaka Water Supply Sector Development Program will receive two loans totaling $200 million and a $2.5 million grant from ADB. It is the first phase of a long-term support program for the urban water supply sector based on the Partnership Framework between external development partners and the government of Bangladesh.

The ADB-assisted program will help reduce child mortality and improve the general health condition of the project area, increase the productivity of women and children by reducing the time required to fetch and store water, and conserve water supply.

Under the program, ADB will provide a $50 million loan in two tranches to support reforms in the urban water supply sector. The reforms will help the government improve the management and operation of urban water supply institutions and water supply and sewerage authorities. The reforms include improving local governance and strengthening local institutional framework; preparing a sector strategy; and improving financial performance.

“The reforms will help achieve sustainable and improved operation of water supply services in the urban areas, particularly in Dhaka,” said Tomoo Ueda, Urban Development Specialist of ADB’s Operations Evaluation Department.

ADB will also extend a $150 million loan for the rehabilitation and strengthening of the water supply system in Dhaka, which is in line with the long-term policy and investment roadmap of the government. The loan forms part of a total estimated project cost of $212.7 million, with the balance covered by the government.

The loan has three components. The first involves the rehabilitation and optimization of the water distribution network of the Dhaka Water Supply and Sewerage Authority (DWASA) to minimize losses and allow for 24-hour pressurized water supply and assure water quality.

The second component involves the establishment of sound financial management, efficient billing, revenue collection, and customer record systems. The component also entails comprehensive staff training and extensive demand control and awareness campaign for consumers. The third component will provide project management and implementation support.

ADB will also provide a $2.5 million grant to fund a $3.125 million technical assistance to extend advisory support to the government in improving and strengthening the management and capacity building of staff at urban water supply agencies.

Bangladesh has the seventh largest population in the world. However, its land area is limited, making the country one of the most densely populated. Nearly a quarter of its 140 million people live in urban areas, and the urban population is expanding 2.5% annually, nearly twice the national rate. Almost a third of the urban population dwell in the capital, and the number of people living in Dhaka is rising two times faster than other urban areas.

The country’s economy has generally expanded by more than 5% a year during the 2000-2006 period. Most of the development has taken place in the cities, and in particular in Dhaka.

“Despite considerable progress, basic services in all urban centers are deficient. Urban water supply conditions are typically characterized by high ratio of unaccounted-for-water, tariffs below average production costs and illegal connections,” said. Mr. Ueda.

About ADB