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Govt to sign MoU with Melamchi donors ADB’s team in town

BY NAVIN SINGH KHADKA

Kathmandu, July 3:The Government will sign a joint Memorandum of Understanding with the donors of Melamchi Water Supply Project (MWSP) on 21st this month here after a visiting mission from Asian Development Bank (ADB) Headquarters finishes observing the project’s different aspects within the next couple of weeks.

The MoU will pave way for the loan approval process for the project thereby taking the donors into confidence, said Dinesh Chandra Pyakurel, Director of Melamchi Water Development Board.

Representatives of MWSP’s donors including Norad (Norwegian aid agency), World Bank, Japanese Bank for International Co-operation (JBIC) and ADB will gather here for the meet slated for later part of this month.

"Swedish International Development Agency (SIDA) has also given positive indication to take part in the meet," said Pyakurel. "The MoU to be signed will be much like an aid memoir."

But before that, the team from ADB headquarters – designated as loan fact-finding mission – will examine the project’s different aspects and discuss them with the government. "We will discuss different issues including the project cost and its implementation part with the government," said Arthur Mcintosh, Senior Project Engineer of ADB, one of the three members in the visiting team that arrived here today.

After signing the MoU, the ADB officials will return to their headquarters where they will advise the bank’s board. What will follow is the project’s appraisal expected to be over by the end of August this year. Finally, according to Mcintosh, the bank will initially approve its US $ 60 million loan on December.

The co-ordinator among the donors of MWSP, ADB has assured funding the project’s bulk distribution component that will be piping in Melamchi waters from the Melamchi River in the north-east of Kathmandu through a 28 kilometre long tunnel. Norad has already committed US $ 24 million grant for the tunnelling component while Swedish International Development Agency (SIDA) has agreed to provide US $ 15 million for the same.

The government, said Pykurel, has already made a request to SIDA, to add another US $ 10 million in its grant. JBIC has already assured of a US $ 55 million loan for the Water Treatment component of the project. World Bank has given a positive indication to provide a US $ 15 million loan for the rehabilitation of the distribution network in the Capital Valley.

So far, only Nordic Development Fund is yet to show a positive gesture for its contribution in the project.

The drinking water project, of late tagged at US $ 340 million, is expected to pipe in 170 million litres of water per day after the completion of its initial phase. Later, when waters from Yangre and Larke Rivers are piped into the Melamchi network, the supply is estimated to reach 540 million litres in a day.

Earlier billed at US $ 400 million, the project cost dropped after the hydropower component was excluded from it. Two major donors – Norad and ADB – had stiff differences on the installation of the hydel plant in the project detail-designed by Norplan, a Norwegian Consultant of the government. Supported by Norad and opposed by the ADB, the hydropower component, expected to be between five and 25 MW, was an apple of discord during the fourth donors’ meet in the capital in February earlier this year.

While no donors’ meet – that is already due – has taken place since then, ADB made it clear in April this year that it would not fund the project with the hydropower. The government later took a decision in line with ADB’s stand.

Of the total project cost, the government will bear 20 per cent totalling to US $ 71 million. Having sanctioned US $ seven million, the officialdom has already spent around Rupees 60 million for the construction of main access road between Melamchi Pool and Thimbu — nearby the tunnel construction site.

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