Program Concept:

The main concept of the Town Development Programme (TDP) is to expand TDF as an efficient and sustainable financing institution for development of municipal infrastructures. The funds under TDPs were to be exclusively used to finance the local costs of communal infrastructure projects and income generating projects, such as Bus Park, Shopping Complex, Vegetable Market, Multipurpose Building complex, Parks etc, including the local level planning and construction supervision.
Project Area: 58 municipalities: (Biratnagar, Nepalgunj, Birgunj,Butwal, Ramgram, Guleria, Bheemdatt,Mechinagar, Butwal, Malangawa, Lekhnath, Kalaiya, Siraha, Lahan, Walling, Putalibazar, Gaur, Rajbiraj, Dharan and Itahari ).

Program Objectives:

Shall prepare, implement, operate and maintain the project inconformity with sound financial and engineering practice and substantially in accordance with “loan and grant policy” agreed upon between the TDF and KfW.

Program Components:

Revenue generating economic infrastructure (Bus Park, Shopping Complex, Vegetable market, multipurpose complex, Parks etc.) and social projects (Road, drainage, water supply, Preservation of Natural, Cultural, Archaeological or Heritage Sites, Slaughter house, Public toilet) in selected municipalities of Nepal

Financing Modality:

Sources of blended financing are TDF loan (40%), GON matching grant (50%) and municipal contribution (10%). TDF disbursed about NPR 18 Million (including 50% GON matching) by the reporting time. These projects were identified, appraised and agreement signed with municipalities during the reporting period. This type of fast-track approach for developing and appraising projects gives strategic benefit to TDF in developing similar projects in future and possibly leverage the projects financing of TDF through GoN matching grant.

TDF has adopted the Investment Guidelines 2015 (Revolving Fund Guidelines), endorsed/approved by Ministry of Finance and received concurrence from KfW to ensure the investment approach.

Town Development Program – Phase I

GoN signed financing agreement with KfW on 27 November 1995 for total amount of DM 10 million as grant. The grant under TDP I were fully utilized for on-lending and disbursed to municipal projects (social and revenue generative). About DM 9 million was allocated for financing municipal infrastructure projects where as DM 1 million was allocated for financing feasibility studies and local supervision cost.

The projects financed under TDP I was successfully completed and secured the first milestone of debt financing urban infrastructure in Nepal. Under this project,  total amount  of NPR 340.9 million was approved for total number of 198 projects across the country. Among them, 17 projects were loan assisted projects, 177 projects were grant assisted projects and 4 projects were cancelled. Within the approved amount, TDF was able to disburse NPR. 113.4 million Loan and NPR 213.3 million grant and the remaining amount was transferred to TDP II. TDF has already recovered 100 percent loan amount of this project.

Total Project Cost (In DM): 10 Million (1 DM= NRs. 30)

Project Status: Completed

Town Development Program II

GoN signed grant agreement with KfW on 30 November 2000 for total grant amount of DM 14,002,431.52 (EURO 7,159,329.55) under the ongoing TDP II. GoN and KfW signed supplemental agreement on 30th November, 2000 for additional amount of EURO 393,957.63.

Under TDP II total amount equivalent to NPR 924.3 million was approved for total number of 217 projects. Out of which, 38 were loan assisted projects and 179 were grant assisted projects. As of now, 31 loan assisted projects and 171 grant assisted projects have been successfully completed.
Under TDP II, TDF had financed total amount of NPR 391.12 as loan with interest rate ranges from of 6.5 percent to 10 percent in different types of project with 16 – 20 years of maturity period. Similarly NPR 208.6 million had been disbursed under TDP II as grant by the reporting period.

Project Status: Ongoing (nearing completion)

Town Development Program III

GoN signed grant agreement with KfW on 11 July 2008 for total grant amount of EURO 7,500,000 for the TDP III programme.

Under TDP III, total amount equivalent to NPR 937.523 million has been approved for the 75 projects. Out of which, 22 were loan assisted projects and 63 were grant assisted projects. Out of total approved projects, 12 loan projects and 38 grant projects have been completed.
Under TDP III, TDF had financed total amount of NPR 361.33 as loan with interest rate ranging from 5.5 percent to 11.5 percent in the different types of project with 20 years maturity period. Similarly, NPR33.62 million had been disbursed as grant by the reporting period.