Skip to main content

Business Process

Business Process

Town Development Fund (TDF) has various urban development projects under implementation. Among different projects at hand, some projects are nearing completion, whereas some others are under initiation phase. Similarly, necessary business processes for some of the projects are still ongoing and these projects have potential to be enlisted in TDF’s portfolio. Overall business process of TDF is presented below.

Business Project of TDF

Urban Infrastructure Development Program (UIDP)

Urban Infrastructure Development Program (UIDP) is implemented with the financing agreement between GoN and TDF to mobilize the source of GoN. TDF lends financial resources for investments in municipal development projects with the intention to finance projects of municipalities and urbanizing rural Municipalities. Town development fund also seeks to increase the Urban Infrastructure development program portfolio in coming years, for the positive impact on the development of urban centers as engines of growth. UIDP receives a credit line from the GoN within a set out financing modality as loan and this credit line does not comprise of any grant. The Urban Infrastructure Development Project (UIDP) follows the project cycle as explained in Figure 1.


Stage 1: Application: TDF receives loan applications along with the required documents from the municipalities.

Stage 2: Project Review: TDF performs the following activities at this stage

  • Reviews submitted document, provides comments and feedback
  • Conducts site visits for the project that has been submitted for loan approval
  • Arranges meetings with the municipal officials for a formal discussion to understand the site and comprehend project details of the concerned projects to evaluate its suitability. This process enables TDF to better understand the project as well as the site and communicate with the local bodies regarding the project itself.

Stage 3: Appraisal Preparation: After DPRs have been reviewed and site visits have been conducted, the appraisals are undertaken for the projects. Based on these appraisals, the projects are evaluated under criteria set by TDF for respective projects, which are feasible enough, are accepted and undertaken. Appraisal process ensures that the municipalities are in line with the appraisals conducted by TDF and these projects also fulfill necessary conditions of financing for the project.

Stage 4: After TDF has finalized the decision, the municipalities are informed about the final decision of TDF, whether the institution will undertake or reject the project. The municipalities are also provided with the valid reasons for both acceptance and rejection of the project based on project appraisal.

Stage 5: After the project appraisals has been completed, the proposal regarding decision to undertake is presented before the Investment Promotion Committee, it recommends the projects to the Board for final approval.

Stage 6: Loan agreement is signed at this stage after the recommendation of loan from the IPC with approval from the Board.

Stage 7: After the signing of the loan agreement procurement process for the project, construction work is initiated by calling Invitation for the Bids, followed by evaluation of submitted bid and the award of contract. After this process construction work for the projects begins. All these construction works need to be undertaken as scheduled by the municipality.

TDF constantly monitors all of its business processes and supports the municipalities when required. TDF also monitors the construction works undertaken after this process and also disburses the payments as per the request for payments. TDF deems the project complete once the project completion report is submitted by the municipality. The post evaluation stage is also considered for loan repayment from the invested projects as well.

Technical Assistance Program

TDF has been implementing technical assistance programs for the capacity building of municipalities and water users’ committees in project development, project implementation, project management, financial management, revenue improvement, and for periodic plan preparation based on demand side requirements. TDF’s Technical and Financial assistance initiatives have been presented in Figure 2.

TA Programme

Figure 2: TDF Technical and Financial Assistance

Donor Based Projects

TDF has various donor-based project viz. STWSSSP, UWSSSP, TDP, STIUEIP, IUDP etc. Here, the business process is explained mainly for Water supply Projects. Currently, TDF engaged with five programs under the water supply and sanitation sector namely STWSSSP – I, STWSSSP – II, STWSSSP – III, UWSSSP & Co-Financing. Town Development Fund (TDF) is responsible for providing loan, equivalent to 25% of civil works costs for water supply subprojects, to the Water Users’ Associations (WUAs). TDF supports WUAs in handling project accounts and financial management during the implementation and loan repayment period. The major role and responsibilities of TDF under these projects as follows:

  1. Financial appraisal of the subprojects;
  2. Signing subproject financing agreement with the WUAs or municipalities;
  3. On-lending the loan portion to the WUAs or municipalities;
  4. Recommending and monitoring tariffs to cover operation expenditures, debt service payments and future expansion;
  5. Providing training in tariff setting, accounting, computerized billing, and financial management to members and/or employees of WUAs or municipalities; and
  6. Disbursing and receiving repayment of loans.

Project Cycle:

The Water supply and sanitation sector projects follow the project cycle as presented below.

Stage 1: Application: The PMO/DWSSM prepares the DPR for selected projects and sends it to TDF with required documents as prescribed by the project. Procurement, contract management and quality assurance procedures are managed by DWSSM.

Stage 2: Appraisal Preparation: Once the DPRs are submitted by the PMO to TDF, appraisals are undertaken. TDF conducts appraisal based on the DPR and TDF’s Guidelines. Procurement of contract from DWSSM and project appraisal from TDF move in parallel.

Stage 3: After the project appraisals has been completed, the proposal regarding decision to undertake is presented before the Investment Promotion Committee, it recommends the projects to the Board for final approval.

Stage 4: Loan agreement is signed with the WUAs or municipalities in this stage after Approval of loan both from the investment committee and the Board. TDF also prepares and recommends tariff structure that WUAs need to comply for the assurance of loan recovery.

Stage 5: After the signing of loan agreement procurement process, construction work is initiated. TDF disburses funds to the WUAs/ contractors based on the submitted IPCs. TDF also considers repayment of loans mechanisms inthis stage as well.