Asian Development Bank Loan for Melamchi Project of Nepal: With the signing of a loan agreement between the government and the Asian Development Bank, the dream project may become a reality By A CORRESPONDENT Will the ambitious and much talked about Melamchi Water Supply Project (MWSP) become a reality? Yes, if latest developments are any indication. With the signing of an agreement for a US$ 120 million soft loan between the Asian Development Bank (ADB) and the Nepalese government for Melamchi on November 18, there are indications that the project has finally taken off. Melamchi river : Final deal Of course, some formalities are yet to be fulfilled. As per ADB rules, the agreement reached during the loan negotiations needs to be endorsed by the Nepalese government and senior management of the ADB. Once this endorsement is obtained, the next step is approval by the ADB board of directors. "The loan is expected to go to the ADB board before the end of the year and if approved, loan signing would take place some time early next year," said Dr. Richard Vokes, resident representative at the ADB Nepal Resident Mission. The approved loan, to be repaid over a period of 32 years, will be used mainly to construct a 28-km-long tunnel that will bring water from Melamchi River in Sindhupalchok district, nearly 40 km northeast of Kathmandu, to Sundarijal. The money will also be used to finance bulk distribution of water, management of waste water and social upliftment programs. The ADB is the lead donor in the US$ 340 million project. A number of bilateral donors, the World Bank and the Nepalese government are expected to contribute the rest of the money. The Japanese Bank for International Cooperation has agreed to provide a loan assistance of US$ 54 million for the construction of the project's water treatment plant. Similarly, the Nordic Development Fund has assured an aid of around US$ 10 million while the Swedish International Development Agency (SIDA) and the Norwegian Aid Agency (NORAD) have agreed to jointly provide a grant of US$ 50 million for the tunneling part of the project. The World Bank is expected to provide a loan of US$ 50 million while the Nepalese government is expected to invest US$ 115 million. All the donor agencies are expected to reach an official agreement with the government by April next year, officials said. Before that, the government will have to exhibit its commitment toward reforming the management of the state-owned Nepal Water Supply Corporation and fulfill other formalities. The project, estimated to be completed by 2006, will provide 170 million liters of water a day to over a million people in the capital valley. http://www.wafed-nepal.org/.../Melamchi%20Water%20Supply%20Project%20and%20Issues%20of%20Concerns%20Final%85.pdf Melamchi Water supply project site: http://www.melamchiwater.org/gall_38.htm