Project Description

The Project was designed and implemented to address key issues related to Nepal’s rapid urbanization. In particular, the rapid growth of small towns has far outstripped the capacity of their water supply and sanitation (WSS) infrastructure and services. In 2001, ADB initially supported the government’s efforts to address these issues through a first Small Towns Water Supply and Sanitation Sector Project. This follow-up project aimed for improved, affordable and sustainable water supply and sanitation services that are governed and managed by locally accountable representative bodies. The project had three expected outputs: (i) efficient, effective, and accountable urban water supply and sanitation sector developed; (ii) safe, accessible, and adequate water supply and sanitation facilities developed in 20 towns; and (iii) governance and capacity strengthened for project operation and management.

The project was estimated to cost $76.14 million.4 The government secured a grant of $45.10 million from ADB’s Special Funds resources (Asian Development Fund) to support the project. ADB approved the project on 17 September 2009 and the grant became effective on 14 January 2010. Project activities were completed on 31 December 2017 after two extensions, 21 months after the original closing date. The project closed on 18 March 2019.

Financing Modality of STWSSSP II

In the Small Water Supply & Sanitation Sector Projects (STWSSSP II), GoN provides 50% of total project cost as grant and the remaining 50% project cost is shared by users in which, 35-45% comes from TDF as loan and remaining 5% to 15% is contributed by users themselves. After the successful implementation of STWSSP I and STWSSP II, the Third Small Town Water Supply & Sanitation Sector Project (STWSSSP-III) has been started.

Under the STWSSSP-II, as per the subsidiary loan agreement held with TDF, GoN has allocated $ 17 million loan for financing through TDF. TDF’s loan equivalent to 25-45% of project costs are planned to recover in down to 25 years including 5 years grace period.

Small Towns Under STWSSSP-II

1. Fiddim
2. Shivanagar
3. Indrapur
4. Damak
5. Baglung
6. Narayan
7. Sandhikharka
8. Karahiya Makrahar
9. Lamahi
10. Bhasi
11. Darakh Sukhad
12. Byas
13. Meghauli
14. Kakarbhitta
15. Dhankuta
16. Duhabi
17. Letang Small Town
18. Rampur Small Town
19. Mukundapur
20. Baitadi
21. Khandbari

Status of the STWSSSP-II

Underthe STWSSSP-II, as per the subsidiary loan agreement held with TDF, GoN has allocated $ 17 million loan for financing through TDF. TDF appraised and signed loan agreement. TDF has approved NPR 1984.6 million for all 21 projects.Where   all  projects are completed TDF has been supporting WUSCs through its own fund for enhancing their financial and institutional capacity. TDF disbursed NPR 1991.2 Million of total agreed amount to 21 towns under STWSSSP II.