Severn Trent withdraws bid BY BIKASH SANGRAULA KATHMANDU, May 22 - Six days after expiry of its ninth and final deadline to the government for award of the management contract for Kathmandu Valley's water supply, UK firm Severn Trent Water International (STWI) announced withdrawal of its bid on Monday. In a statement posted at its website and e-mailed to the Post Monday evening, STWI said, "Severn Trent Water International is disappointed by the failure to conclude the tender process for the proposed management contract to assist in the development and management of a new publicly owned water utility in the Kathmandu Valley." It has added in the statement, "The Government of Nepal has decided to seek an alternative route to meet the water supply needs of the Kathmandu Valley, and STWI wishes them success in their endeavor." According to a highly placed government source, the STWI board had made the decision to withdraw its bid for the Kathmandu job on May 17. However, upon special request by the Asian Development Bank (ADB), it had agreed to withhold the decision till Monday, to provide time to the government of Nepal to take swift decisions on the contract award. A cabinet meeting on Monday, which was expected to settle the matter, did not even take up the topic. Melamchi in soup The withdrawal by STWI is set to have a serious impact on the future of Melamchi project, the biggest development project in the country. In a letter to Minister for Physical Planning and Work Hisila Yami on May 18, ADB Vice President Liqun Jin had expressed the bank's inability to extend any loan commitment to the Melamchi after June-end 2007, if a management contractor was not appointed by then. ADB is the largest donor to Melamchi. Apart from its initial commitment of $120 million, the bank had committed an additional $45 million to Melamchi in March this year when the project was scaled down from $464 million to $350 million owing to fund crunch. ADB's funding commitment expires on June 30. Its extension depends solely on appointment of a management contractor for which STWI was sole bidder. The bank's funding is meant for constructing a 26.5-km diversion tunnel from Melamchi River to Sundarijal in Kathmandu, which is the costliest component of the project. Melamchi is designed to supply 170 million liters of water daily to Kathmandu Valley, which faces chronic water scarcity. Jin had also said in his letter to Yami that overturning the cabinet decision of the previous government to award the contract to the UK firm would not only hinder implementation of Melamchi, but also affect Nepal's status as the bank's Developing Member Country (DMC). As DMC, Nepal gets loan and assistance from the bank's Asian Development Fund window for various development projects. Half of the funding comes as grant. I don’t think ADB will withdraw: Yami Answering questions raised at the Interim Parliament's Finance Committee Monday afternoon regarding the risks her opposition to appointing STWI poses to Melamchi, Minister Yami, who stalled the contract award to look for "alternatives", said she does not believe ADB would abandon Melamchi "so easily". Reiterating her stand that local experts need to be appointed for the job instead of a "controversial foreign company", Yami said she was confident ADB would review its condition for loan extension.