Nepal: Melamchi Water Supply Project

Sovereign Project | 31624-023

Summary

The main objectives of the Project are to alleviate the chronic water shortage in Kathmandu Valley on a sustainable, long-term basis, and to improve the health and well-being of its inhabitants. The Project also seeks to develop a comprehensive institutional framework for urban water management within the valley. The Project comprises (i) infrastructure development; (ii) social and environmental support; (iii) institutional reforms; and (iv) project implementation support.

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Consulting Notices

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Procurement Notices

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Procurement Documents


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Project Name Melamchi Water Supply Project
Project Number 31624-023
Country Nepal
Project Status Approved
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 1820-NEP: Melamchi Water Supply Project
Asian Development Fund US$ 120.00 million
Loan 8235-NEP: Melamchi Water Supply Project
Nordic Development Fund US$ 10.50 million
Loan: Melamchi Water Supply Project
MOF, Japan US$ 18.00 million
Japan Bank for International Cooperation (ODA) US$ 47.50 million
OPEC Fund for International Development US$ 13.70 million
Loan 3110-NEP: Melamchi Water Supply Project - Additional Financing
Asian Development Fund US$ 25.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change
Sector / Subsector Water and other urban infrastructure and services - Urban policy, institutional and capacity development - Urban water supply
Gender Equity and Mainstreaming
Description The main objectives of the Project are to alleviate the chronic water shortage in Kathmandu Valley on a sustainable, long-term basis, and to improve the health and well-being of its inhabitants. The Project also seeks to develop a comprehensive institutional framework for urban water management within the valley. The Project comprises (i) infrastructure development; (ii) social and environmental support; (iii) institutional reforms; and (iv) project implementation support.
Project Rationale and Linkage to Country/Regional Strategy Kathmandu Valley is the country's single largest urban economy and is critical to Nepal's economic growth. Water is central to the well-being of the population and the key to its productive capacities. However, current water services are grossly inadequate and unreliable causing many people to resort to tankers supplies, bottled water, and both deep and shallow wells. The trend has led to serious environmental concerns as shallow wells are becoming increasingly polluted and deep aquifers are being mined to produce additional water. Poor water quality impacts sharply on public health. In terms of access to water (in the dry season) and quality of water, the effects are greatest on the health of the poor. The Project provides the required opportunity to address both the acute socioeconomic distress caused by the lack of adequate safe water to Kathmandu Valley residents, and the institutional challenges to provide water and wastewater management services on a sustainable basis.
Impact Health and well-being of the people in Kathmandu Valley improved.
Project Outcome
Description of Outcome Shortage of potable water in Kathmandu Valley alleviated.
Progress Toward Outcome Development outcome is expected to be expected to be achieved as per revised schedule (By 2016).
Implementation Progress
Description of Project Outputs

A. Melamchi Valley (Suproject 1)

A.1. Raw water diverted from Melamchi Valley to Kathmandu Valley by development of infrastructure, i.e. tunnel, road and water treatment plant.

A.2. Social and Environmental Support provided in Melamchi Valley.

A.3. Efficient project management established and capacity building attained

B. Kathmandu Valley Subproject (Subproject 2)

B.1. Institutional reforms achieved and efficiently operated

B.2. Water distribution and wastewater system improved by provision of capital works

B.3. Social and environmental support provided in Kathmandu Valley

Status of Implementation Progress (Outputs, Activities, and Issues)

A. Melamchi Valley (Subproject 1)

A.1 Melamchi Water Supply Development Board (MWSDB) terminated the previous contract for the Melamchi tunnel on 25 September 2012 due to unsatisfactory performance of the contractor. As of the date of termination, physical progress (tunnel excavation) was 22% (6.3 km out of 27.5 km). Rebidding for the Melamchi tunnel contract started in November 2012. MWSDB issued the letter of acceptance to the winning bidder, Cooperativa Muratori e Cementisti di Ravenna (CMC) on 21 June 2013, the contract was signed with CMC of Italy on 15 July 2013, and the letter to commence was issued on 1 October 2013. Advance payment was made to the contractor in October 2013. The government and ADB attach very high importance to Melamchi tunnel project, a national pride project, and the Government of Nepal reviews the progress of the project every month. The initial progress of CMC on the Melamchi tunnel was encouraging in terms of mobilization of key personnel, equipment, machinery, materials and start-up activities. CMC completed mobilization of key personnel, improvement of access roads and refurbishment of camp sites, and started tunnel excavation on 1 January 2014. CMC's mobilization of resources and excavation progress had improved, though not to the desired extent. The progress of tunnel excavation as of 31 January 2015 was 4,842.7m (22.9% of 21,119.8m, the total required excavation). The average daily excavation progress (ADEP) was 25m/day for the month of January 2015, while the required ADEP was more than 34m/day. CMC is expected to achieve ADEP of more than 30m/day from March 2015 onwards. The Melamchi tunnel contract is expected to be completed by 2016.

A Water Treatment Plant (WTP) to utilize water from Melamchi tunnel is being implemented with JICA funding. MWSDB and the contractor signed the WTP contract on 10 July 2013 and physical works are in progress.

Upgrading construction works in UAR 02 have been completed and the contracts are being processed for financial closure.

Construction of 18-km main access road was completed and opened up between Melamchi Pul Bazar and Timbu.

A.2. Resettlement Plans and Environmental Management Plan (EMP) were prepared and are under implementation for both Subproject 1 and 2 following the split into two distinct subprojects in 2009. The Social Uplift Program (SUP) undertaken in Subproject 1 (in Melamchi valley) include several activities for social and economic development of the areas in the Melamchi Valley such as (i) construction of health centers and provision of essential drugs; (ii) construction of school buildings and provision of educational kits to schools; and (iii) a forest nursery in Timbu. The SUP promotes widespread and meaningful participation of key stakeholders. Compliance with Resettlement Plan and Environmental Management Plan (EMP) is monitored by MWSDB with support from the design and supervision consultant (DSC). Further, services of a Safeguards and Social Development Support consultant (SSDS) have also been taken for monitoring at a second level. MWSDB has been specifically asked to ensure compliance with effluent discharge standards.

A.3 MWSDB is the main agency for project management of Melamchi Subproject 1 (Melamchi tunnel construction). MWSDB is supported by project management consultant (PMC) and design and supervision consultant (DSC). MWSDB has concluded the negotiations for the extension of DSC's services up to March 2015. All the parties are coordinating to improve the pace, quality, safety, and safeguards compliance of the works. MWSDB, DSC and CMC agreed to develop good communication at all levels to (i) ensure implementation of the agreed action plans, (ii) decide expeditiously the contractual matters such as claims, variations, etc., (iii) ensure coordination with DSC, CMC, local residents, army and other relevant government authorities, and (iv) monitor processing payments to the contractor in a timely manner. Semi-annual safeguard monitoring reports are regularly being submitted and disclosed.

For Subproject 2, a Project Implementation Directorate (PID) has been established since 2009 which has been carrying out the activities of Subproject 2.

B. Kathmandu Valley Subproject (Subproject 2)

B.1. KUKL has recruited capacity building and public-private partnership (CBP) team in November 2010. The CBP team completed its work in June 2014. CBP team supported KUKL to achieving the targets of lease and license agreements. KUKL submitted to WSTFC a new proposal for increase in tariff, which was approved by WSTFC on 14 July 2013 with conditions to be fulfilled by KUKL for service improvement. This will help KUKL in improving its operations and service delivery to citizens. An action plan was agreed for KUKL's operational and financial improvement. This action plan, being implemented by KUKL, is expected to address much needed institutional reforms, capacity building and improvements on financial, human resources, and operations management.

B.2. Under Subproject 2, distribution network improvement works are expected to reduce water losses, improve service delivery by enhanced duration and higher pressure of water supply for consumers. PID for Subproject 2 has awarded 47 contracts out of which 40 contracts have been completed and 7 contracts are ongoing. Most of the contracts were completed in 2013 and the remaining contracts are expected to be completed by 2015. There are no major issues with implementation of this Subproject.

B.3. Substantial improvement in water supply is expected after completion of the Melamchi tunnel by 2016. Safeguards unit has been fully staffed with social development officer, environmental officer, and legal officer. This unit is supervising compliance with safeguards of ongoing physical works with support of supervision consultant. Resettlement Plan and Environment Management Plan (EMP) have been prepared and are being implemented. Semiannual safeguard monitoring reports are regularly being submitted and disclosed.

Geographical Location Kathmandu Valley to Melamchi Valley
Safeguard Categories
Environment A
Involuntary Resettlement A
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects Environmental Impact Assessment (EIA) studies (2000, 2001, 2002) were carried at the time of approval of the Project. In the earlier phase of implementation, compliance with the requirements was regularly monitored by the consultant CEMAT/Schemes JV in association with EEC who submitted their final Environmental Management Plan (EMP) report in 2009. In December 2009, Safeguard and Social Development Support (SSDS) ICON-CMS JV consultant was mobilized. At the first level, MWSDB and DSC are monitoring compliance with environmental safeguards. As the second level, SSDS consultant is monitoring the compliance with EMP such as monitoring water quality, noise quality and air quality, fish population and diversity assessment, measurement of discharge, staff gauge reading and nursery establishment. Environmental monitoring and reporting is ongoing.
Involuntary Resettlement Involuntary resettlement follows the requirements of ADB and the Government. ADB Policy and Land Acquisition Act (LAA) 2034 (1977 A.D.) are being complied with, such as the provisions related to compensation standards and benefits, compensation for lost assets at market value, provision for alternative land and compensation for standard crops and trees. MWSDB prepared a Resettlement Policy Framework (RPF), approved by the Cabinet in 2057 (2000 A.D.), to cover resettlement-related needs of Project affected persons (PAPs). The Resettlement Action Plan (RAP) compensation and mitigation measures include the following: compensation upon acquisition of land, crop and trees and house or commercial enterprises, mitigation for the loss of water due to diversion to Melamachi River, displacement allowances, rehabilitation measures, loss of government property, loss of community facilities and resources, community losses, and general counseling. Land acquisition process is completed and resettlement monitoring and reporting is ongoing.
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design The Project was designed with extensive participation of stakeholders, including beneficiaries, adversely affected people, village development committees and ward representatives, district development committees and municipal officials and representatives, ministries concerned and MWSDB, the private sector, external funding agencies, NGOs, and consultants.
During Project Implementation The Project is encouraging direct participation of beneficiaries through social uplift program implementation, representation of adversely affected people in the compensation determination committee, and representation of Kathmandu Valley beneficiaries in water users associations. The Project is also undertaking consensus building at all levels on issues such as water services, environmental and social mitigation and compensation, and employment.
Business Opportunities
Consulting Services The selection and engagement of all remaining consulting services to be financed by ADB shall be in accordance with the provisions of Schedule 4, Section D, paras. 10 to 12 of the Amended and Restated Loan Agreement and with the ADB's Guidelines on the Use of Consultants (2007, as amended from time to time) using the quality-and cost-based method.
Procurement Procurement of all remaining goods and works to be financed out of proceeds of the Loans will be in accordance with ADB's Procurement Guidelines (2007, as amended from time to time).
Responsible ADB Officer Manoj Sharma
Responsible ADB Department South Asia Department
Responsible ADB Division Nepal Resident Mission
Executing Agencies
Ministry of Physical Infrastructure and TransportDeep BasnyatCPMO@DWSS.MOS.COM.NPKathmandu, Nepal
Kathmandu Upatyaka Khanepani Limited (KUKL)Tripureshwar, Kathmandu, Nepal
Melamchi Water Supply Development BoardH.P. SharmaKathmandu, Nepal
Ministry of Urban DevelopmentMr. Kishore ThapaSinghadurbar, Kathmandu, Nepal
Timetable
Concept Clearance 08 Mar 1999
Fact Finding 03 Jul 2000 to 24 Jul 2000
MRM 15 Sep 2000
Approval 03 Jul 2008
Last Review Mission -
PDS Creation Date 12 Feb 2007
Last PDS Update 09 Mar 2015

Loan

Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 210.28 Cumulative Contract Awards
ADB 0.00 - 0.00 0.00 %
Counterpart 131.08 Cumulative Disbursements
Cofinancing 79.20 - 0.00 0.00 %

Loan 1820-NEP

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
21 Dec 2000 24 Jan 2001 28 Nov 2001 31 Mar 2007 31 Dec 2016 -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 317.20 Cumulative Contract Awards
ADB 120.00 21 Dec 2000 120.54 0.00 88%
Counterpart 118.00 Cumulative Disbursements
Cofinancing 79.20 21 Dec 2000 91.63 0.00 67%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating Satisfactory - Satisfactory - - Satisfactory

Loan 3110-NEP

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
11 Feb 2014 07 Apr 2014 25 Apr 2014 30 Jun 2017 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 38.08 Cumulative Contract Awards
ADB 25.00 11 Feb 2014 16.65 0.00 74%
Counterpart 13.08 Cumulative Disbursements
Cofinancing 0.00 11 Feb 2014 0.00 0.00 0%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating Satisfactory - Satisfactory - - Satisfactory

Loan 8235-NEP

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
03 Jul 2008 03 Jul 2008 03 Jul 2008 31 Jul 2013 30 Sep 2015 -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 10.50 Cumulative Contract Awards
ADB 0.00 03 Jul 2008 0.00 10.06 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 10.50 03 Jul 2008 0.00 9.97 99%

Safeguard Documents

See also: Safeguards
Title Document Type Document Date
Melamchi Water Supply Project - Subproject 1: Annual Progress Report (January-December 2013) Environmental and Social Monitoring Reports Aug 2014
Melamchi Water Supply Project - Subproject 2: Environmental and Social Monitoring Report (July-December 2013) Environmental and Social Monitoring Reports Mar 2014
Melamchi Water Supply Project - Subproject 1: Environmental and Social Monitoring Progress Report (May-August 2013) Environmental and Social Monitoring Reports Sep 2013
Melamchi Water Supply Project - Subproject 2 and Kathmandu Valley Water Supply Improvement Project: Environmental and Social Monitoring Report (January-June 2013) Environmental and Social Monitoring Reports Jul 2013
Melamchi Water Supply Project - Subproject 1: Environmental and Social Monitoring Progress Report (January-April 2013) Environmental and Social Monitoring Reports Apr 2013
Melamchi Water Supply Project - Subproject 1: Annual Progress Report (January - December 2012) Environmental and Social Monitoring Reports Feb 2013
Melamchi Water Supply Project - Subproject 2: Biannual Report on Environment and Social Safeguards (September - December 2012) Environmental and Social Monitoring Reports Jan 2013
Melamchi Water Supply Project-Subproject 2: Bi-Annual Report on Environment and Social Safeguards (February 2012 - August 2012) Environmental and Social Monitoring Reports Sep 2012
Melamchi Water Supply Project - Subproject 1: Monthly Progress Report (July 2012) Environmental and Social Monitoring Reports Jul 2012
Melamchi Water Supply Project - Subproject 2: Second Semestral Report Environmental and Social Monitoring Reports Feb 2012
Melamchi Water Supply Project: Resettlement Action Plan for Kathmandu Valley Water Supply and Sanitation Sub-project (Sub-project 2) Resettlement Plans May 2009
Melamchi Water Supply Project: Resettlement Action Plan for Melamchi River Water Diversion Sub-project (Sub-project 1) Resettlement Plans Aug 2008
Melamchi Water Supply Project - Sub-project 1: Environmental Management Plan for Melamchi River Water Diversion Sub-project Environmental Management Plans Jul 2008
Melamchi Water Supply Project - Sub-project 2: Environmental Management Plan for Kathmandu Valley Water Supply and Sanitation Environmental Management Plans Apr 2008
Melamchi Water Supply Project Summary Environmental Impact Assessments Aug 2000
Melamchi Water Supply Project Environmental Impact Assessments Aug 2000

Evaluation Documents

See also: Independent Evaluation

No documents found.


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