Nepal: Kathmandu Valley Water Supply Improvement Project

Sovereign Project | 34304-043

Summary

The project will complement past and ongoing efforts to improve access, efficiency, and reliability of water supply services to the residents of Kathmandu Valley. While ongoing projects are investing in source augmentation, construction of Melamchi tunnel and water treatment plant, the project will focus on distribution of water from the treatment plant to consumers, and improvement of efficiency and service delivery. The project will also support and consolidate institutional development and improvement of governance in the water sector in Kathmandu Valley.

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Procurement Documents


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Project Name Kathmandu Valley Water Supply Improvement Project
Project Number 34304-043
Country Nepal
Project Status Approved
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 2776-NEP: Kathmandu Valley Water Supply Improvement Project (formerly Kathmandu Valley Water Distribution, Sewerage, and Urban Development)
Asian Development Fund US$ 80.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Governance and capacity development
Sector / Subsector Water and other urban infrastructure and services - Urban policy, institutional and capacity development - Urban water supply
Gender Equity and Mainstreaming Effective gender mainstreaming
Description The project will complement past and ongoing efforts to improve access, efficiency, and reliability of water supply services to the residents of Kathmandu Valley. While ongoing projects are investing in source augmentation, construction of Melamchi tunnel and water treatment plant, the project will focus on distribution of water from the treatment plant to consumers, and improvement of efficiency and service delivery. The project will also support and consolidate institutional development and improvement of governance in the water sector in Kathmandu Valley.
Project Rationale and Linkage to Country/Regional Strategy

The project will follow the investment priorities identified in the government's capital investment and asset management program, 2010, for annual investments in water supply infrastructure in Kathmandu Valley. Kathmandu Valley is characterized by high population growth of more than 6% per annum and high population density of more than 10,000 per square kilometer. The population of Kathmandu Valley is estimated at 2.72 million in 2011 and 3.50 million in 2016. Rapid and largely unplanned urban growth, lack of sustainable water sources, and inadequate past investments have resulted in poor availability and quality of drinking water. Moreover, poor access to water has caused increased disease incidence, health risks, and associated economic burdens that disproportionately impact the poor and vulnerable.

Earlier efforts of the Government of Nepal and various development partners to improve water supply services in Kathmandu Valley have now started to achieve the desired results. The progress of the Melamchi Water Supply Project has been encouraging in the last 2 years despite rebidding and mobilization of a new contractor for the Melamchi Tunnel. These loans were adversely affected from 2000 to 2006, when several development partners withdrew due to the then-prevailing volatile sociopolitical situation and internal conflict in the country leading to reduction of the project financing by $133 million from the estimated $464 million. Consequently, the Asian Development Bank (ADB) approved a major change in scope and implementation arrangements of these loans in February 2008 to prioritize the use of available funds for source augmentation, i.e., Melamchi tunnel. The Japan International Cooperation Agency (JICA), in a parallel financed project, is providing support for a water treatment plant to utilize water from Melamchi tunnel. To fully utilize the benefits of ongoing projects, investments in the project are necessary and timely.

The project was developed using lessons from previous ADB interventions. The implementation arrangements have been kept simple with a focus on using the institutional arrangements created under previous projects to ensure continued capacity building and sustainability. An important lesson from earlier projects was to give importance to rehabilitation of networks along with creation of assets. Accordingly, the project will focus on reducing nonrevenue water (NRW) and improving the existing network. Another lesson is to involve stakeholders; the project has provided adequate resources for participation of various stakeholders. Further, as learned from earlier projects, civil works packages have been kept sufficiently large to attract qualified international bidders.

To drive efficiencies and introduce best practices, the project will utilize the district metering areas approach for distribution network improvement and NRW reduction. With the completion of Melamchi tunnel, Kathmandu Valley will receive an additional 170 million liters per day (MLD) of water, while the current average availability is only 100 MLD against a demand of 367 MLD. The project will introduce 24-hour water supply in at least 10% of the service area, which will be selected on techno-economic considerations. The project will adopt contracts with adequate provisions to monitor NRW reduction, introduce asset management plan, and develop geographical information system (GIS) to maximize benefits.

The project is consistent with ADB's Nepal country partnership strategy, which aims to support Nepal's peace and development aspirations by promoting the following four pillars: (i) broad-based and inclusive economic growth, (ii) inclusive social development, (iii) governance and capacity building, and (iv) climate change adaptation and environmental sustainability. The project fits into the priority sector water supply and other municipal infrastructure and services identified in the country partnership strategy and will support the country's peace and development through improved access to basic services. The project is included in the country operations business plan of Nepal.

Impact Sustainable water supply services for residents of Kathmandu Valley
Project Outcome
Description of Outcome Improved access, efficiency, and reliability of water supply services to residents of Kathmandu Valley including poor women and men
Progress Toward Outcome Execution of civil works is still ongoing and the target outcome for water supply infrastructures have not yet been achieved.
Implementation Progress
Description of Project Outputs

Water supply infrastructure rehabilitated and expanded

Operating and financial systems improved, and capacities strengthened

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

1. Water supply infrastructure rehabilitated and expanded

1.1 The project is progressing smoothly with no major issues. The design, supervision and management consultant (DSC) was engaged in August 2012, and is effectively supporting Project Implementation Directorate's operations. The distribution network improvement (DNI) works are being implemented in an innovative manner with the objective of Non-Revenue Water (NRW) reduction on district metering area (DMA) approach rather than traditional pipe-laying contracts.

1.2 The three major civil works contracts for the distribution network improvement for efficient NRW management, amounting to approximately $59.75 million, were awarded from April to September 2013, and are in various stages of implementation.The drilling and development of tube-wells package was awarded in July 2013 and physical works are in progress. Target completions of these contracts are from April to November 2016.

1.3 The three major civil works contracts for the Laying of Bulk Distribution System and Construction of Service Reservoirs (BDS-SRT) works, amounting to approximately $62.67 million, were awarded from March to July 2014. Physical works are in progress. Target completions of these contracts are from March 2016 to February 2017.

1.4. Delivery of most of the minor packages have been completed while delivery of the few remaining packages are nearing completion.

2. Operating and financial systems improved, and capacities strengthened

2.1 The Community Awareness and Participation Consultant (CAPC) was mobilized in September 2012, and is supporting PID for implementation of gender equality and social inclusion (GESI) action plan, resettlement plan and grievance redress system, and various other community awareness campaigns and ensuring contractors' compliance to safeguards requirements. In addition to their other activities, CAPC is focusing on: (i) effective implementation of GESI plan, including support for formulation of KUKL's GESI guidelines and operationalization of GESI unit; (ii) preparation of information, education and communication (IEC) material including leaflets, brochures, and a quarterly newsletter to disseminate the good outcomes of project works a newsletter was recently launched; (iii) effective and useful programs in schools on issues detailed out in community awareness and participation plan (CAPP); (iv) a system to inform, in advance, the households and businesses likely to be affected by construction activities under the project; (v) training programs for construction workers on occupational health and safety (OHS); (vi) support to the ongoing clean the Bagmati River campaign; and (vii) operationalize the lessons from the performance assessment survey earlier conducted by CAPC.

2.2 The Business plan of the water utility in Kathmandu, KUKL, was approved in July 2012 and is currently being implemented. KUKL's audited financial statements (AFSs) of FY2007-08 and FY2008-09 were approved by its Board and general body meeting in September 2013. The audited financial statements of FY2009-10 and FY2010-11 have been approved by the Board and recently been approved by the general body. Approval of these two years AFSs is important to fulfil stipulated conditions and to ensure proper corporate governance of the utility.

2.3 PID is preparing procurement packages for the refurbishment of water treatment plants, and operationalization of asset management plan.

2.4 New water tariff structure for the Kathmandu Valley was approved by Water Supply Tariff Fixation commission (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.

Geographical Location
Safeguard Categories
Environment B
Involuntary Resettlement B
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects The project is classified as category B for environment. An initial environmental examination (IEE) and environmental management plan including a grievance redress mechanism were prepared in accordance with ADB's Safeguard Policy Statement. The IEE concludes that no significant adverse impacts are anticipated and that the net environmental benefits will be positive and large with fewer waterborne diseases and better public health. To mitigate adverse impacts of increased generation of wastewater, the Kathmandu Urban Environment Improvement Project has been proposed to focus on rehabilitating and expanding the sewerage network and wastewater treatment. An environmental assessment and review framework was prepared to address small components to be defined through detailed design. Additional oversight and mitigation measures will be taken for pipe-laying works along roads passing through heritage areas including permission from the Department of Archaeology prior to construction.
Involuntary Resettlement The project is classified as category B for involuntary resettlement in accordance with ADB's Safeguard Policy Statement (2009). The project does not require any land acquisition. The impacts are limited to temporary disruption of business activities, and temporary shifting of vendors and hawkers during construction works within the right-of-way for the water pipeline works. A resettlement plan, including the grievance redress mechanism, was prepared in accordance with ADB's Safeguard Policy Statement. A resettlement framework was prepared to address small components to be defined through detailed design. Temporary impacts will be limited and compensation for lost income will be provided to those affected as per the resettlement plan.
Indigenous Peoples No impacts to IPs are anticipated as the project focuses on rehabilitation of the existing water supply network in urban areas. Water will be universally supplied to all households within the project area, and meaningful, widespread consultations will continue within all project area communities.
Stakeholder Communication, Participation, and Consultation
During Project Design Adequate consultations were carried out with all the important stakeholders during the project preparatory technical assistance (PPTA), fact-finding and post fact-finding missions. The objective of the consultations was to make citizens of Kathmandu Valley fully aware of the intent, design, schedule, impacts, employment opportunities, and overall benefits of the project, with particular attention given to the poor and the socially-excluded sections of the population.
During Project Implementation A community awareness and participation plan (CAPP) has been prepared to involve key stakeholders for widespread, ongoing, and meaningful participation in project activities. This is especially relevant in a high density urban setting like Kathmandu Valley where disturbances related to construction activities are inevitable. Information disclosure and public awareness are essential for maintaining public support and mitigating grievances during the construction period. A gender equality and social inclusion (GESI) action plan was prepared with clear targets, responsibilities, and resource allocation. The objective of the CAPP and GESI is to make citizens of Kathmandu Valley fully aware of the intent, design, schedule, impacts, employment opportunities, and overall benefits of the project, with particular attention given to the poor and the socially-excluded sections of the population. At the same time, full involvement of citizens can only ensure realization of benefits of many critical activities of the project such as reduction of nonrevenue water (NRW) and improvement of water supply services to citizens including introduction of 24-hour supply. The project activities require coordinated efforts among the executing and implementing agencies and public, private, and community stakeholders. A Community Awareness and Participation Consultant (CAPC) will be recruited to help the Project Implementation Directorate (PID) ensure meaningful and ongoing consultations and public awareness during project implementation and specifically to implement CAPP and GESI action plans.
Business Opportunities
Consulting Services

Design, Supervision, and Management Consultant (QCBS) - 620 person-months - $4.33 million in total

Community Awareness and Particiaption Consultant (QCBS) - 301 person-months - $0.88 million in total

Procurement

International Competitive Bidding - 5 contracts (works); 3 contracts (goods) - Above $1,000,000 for works, above $500,00 for goods

National Competitive Bidding - Multiple small works and goods contracts - $1,000,000 or less for works, $500,000 or less for goods

Shopping - Minor works and goods packages (estimated six) - Less than $100,000

Responsible ADB Officer Vivian Castro-Wooldridge
Responsible ADB Department South Asia Department
Responsible ADB Division Urban Development and Water Division, SARD
Executing Agencies
Ministry of Urban DevelopmentMr. Kishore ThapaSinghadurbar, Kathmandu, Nepal
Timetable
Concept Clearance 11 Mar 2011
Fact Finding 14 Mar 2011 to 28 Mar 2011
MRM 07 Jul 2011
Approval 16 Sep 2011
Last Review Mission -
Last PDS Update 14 Mar 2015

Loan 2776-NEP

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
16 Sep 2011 10 Nov 2011 07 Feb 2012 30 Jun 2017 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 130.00 Cumulative Contract Awards
ADB 80.00 16 Sep 2011 68.63 0.00 95%
Counterpart 50.00 Cumulative Disbursements
Cofinancing 0.00 16 Sep 2011 28.32 0.00 39%

Safeguard Documents

See also: Safeguards
Title Document Type Document Date
Kathmandu Valley Water Supply Improvement Project: Distribution Network Improvement for Efficient NRW Management (Package II) Resettlement Plans Jun 2014
Kathmandu Valley Water Supply Improvement Project: Block Distribution System and Service Reservoir (Package II) Resettlement Plan Due Diligence Report Safeguards Due Diligence Reports Jun 2014
Kathmandu Valley Water Supply Improvement Project: Distribution Network Improvement for Efficient NRW Management Resettlement Plans Jun 2014
Kathmandu Valley Water Supply Improvement Project: Block Distribution System and Service Reservoir (Package I) Resettlement Plan Due Diligence Report Safeguards Due Diligence Reports Apr 2014
Kathmandu Valley Water Supply Improvement Project: Environmental and Social Monitoring Report (July-December 2013) Environmental and Social Monitoring Reports Mar 2014
Kathmandu Valley Water Supply Improvement Project Resettlement Plans Jan 2014
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
Kathmandu Valley Water Supply Improvement Project Initial Environmental Examination Jan 2013
Kathmandu Valley Water Supply Improvement Project: Resettlement Plan (as of Board approval) Resettlement Planning Documents Jul 2011
Kathmandu Valley Water Supply Improvement Project: Resettlement Framework (as of Board approval) Resettlement Frameworks Jul 2011
Kathmandu Valley Water Supply Improvement Project Resettlement Planning Documents Jul 2011
Kathmandu Valley Water Supply and Wastewater System Improvement Project Environmental Assessment and Review Framework May 2011
Kathmandu Valley Water Supply and Wastewater System Improvement Project Resettlement Frameworks May 2011
Kathmandu Valley Water Supply and Wastewater System Improvement Project Resettlement Plans May 2011

Evaluation Documents

See also: Independent Evaluation

No documents found.


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