Project Concept:

In line with the GoN’s 15-Year Development Plan (first prepared in 2009 and updated in 2015) for Water Supply and Sanitation in Small Towns, Asian Development Bank (ADB) has been supporting the Government of Nepal in enhancing water and sanitation services in small towns since 2001.

The Government of Nepal has been providing water supply and sanitation services in 70 small towns basically through co-financing model. The small towns are defined as towns that have (i) a population of 5,000 to 40,000, and (ii) perennial access to roads, grid power, and telecommunications i.e. potential for growth. Population concentration in most of these towns are caused by the rapid population growth in urban centers along major highways due to rural to urban migration. These towns were important links with rural areas acting as markets, transport depots and agricultural processing centers. However, basic services such as WSS were inadequate in these towns. The first small town project was completed in 2009, STWSSSP II completed in December 2017 and follow-up third phase-STWSSSP III sub projects are on-going and nearing to completion.

Project Objective:

The objectives of the project were to (i) improve the health and quality of life of people living in the small towns with average populations of 12,000 each, by constructing water supply, drainage and sanitation facilities, and providing health and hygiene education; (ii) support community participation by developing the institutional capacity of community-based WUSCs, and by requiring the beneficiaries to make contributions in cash or kind to cover partial project costs; and iii) support community participation by developing the institutional capacity of WUSCs, and require water users to make cash or in-kind contributions to cover some project costs; and promote community water quality, and iv) improve project implementation governance.

STWSSSP-I:

This project had set target to provide high standard of water supply services to about 240,000 people in about 29 small towns. Sanitation services-such as on-site sanitation (private latrines), public toilets, waste water management facilities, and storm water drainage, were provided in the same towns through an integrated approach. About 270,000 people have access to improved sanitation facilities. These improvements in health and hygiene education programs have brought significant health benefits in terms of sharp reduction in the occurrence of waterborne diseases. Additionally, women and children will not have to waste much longer time just to go and get water. The saved time could be used in productive activities.

For this Project, the Financial agreement (Loan No : 1755 – Nep ( SF)  had  between GoN and ADB dated 18 December 2000. Based on the financing agreement, Subsidiary Loan Agreement (SLA) signed with TDF dated March 5, 2001. It has allocated US$ 18 million loan for financing through TDF out of total USD 35 million.

Financing Modality Of STWSSSP I

Under Small Water Supply & Sanitation Sector Projects (STWSSSP I), Asian Development Bank invested $32.1 million; Government of Nepal, $12.0 million; local government and water users contributed $6.9 million. About 50-70% of project cost goes to Small Towns through Department of Water Supply and Sanitation (DWSS) as grant and 25-45% goes to WUSCs as loan at interest rate of 3-5%. The rest 5% of project cost comes as direct upfront cash contribution made by users. About 30-45% of total project cost was recovered under this model of financing water supply to towns.

STWSSSP-I:Rehabilitation Program:

Under Small Town Water Supply & Sanitation Sector Project (STWSSSP-I) Rehabilitation, out of the 24 projects, 18 projects have been rehabilitated and remaining projects are targeted to complete by the end of this Fiscal Year, 2074/75 (2017/18). TDF has approved loan NPR 391.7 Million and disbursed NRS 288.14 Million by January 2017.STWSSSP-I Rehabilitation sub-projects, 14 projects were awarded and remaining projects were targeted to award within this FY 2016/17.

Tariff Setting In STWSSSP Sub Projects:

The project’s financial sustainability model assumes an appropriate tariff level to recover at least necessary capital and O&M costs. Awareness raising about tariff payment and use of safe water were started early in the project preparation stage for water users and WUSC members. Similarly realistic assessment was made regarding the amount of water to be used and structure of tariff to be charged was finalized in close consultation with the users. Tariffs bands are based on volumetric use of water on progressive basis. Households are minimally charged so as to cover the basic operational and maintenance cost only.

Improved access to water supply: The improvements in health and hygiene education programs has brought significant health benefits in terms of reduction in the occurrence of waterborne diseases. Additionally, women and children will not have to waste much longer time just to go and get water. The saved time could be used in productive activities.

Improved capacity of WUSCs:The project also provided technical training to members and staff of the water users and sanitation committees to develop their capacity for the operation and maintenance of town projects regarding meter reading, meter maintenance, plumbing, testing water quality, and operating.

Project Status: Completed