ADB says it will pull out from Melamchi

Asian Development Bank (ADB) headquarter has sent a letter to Finance Minister Dr. Ram Sharan Mahat stating that it would pull out from the Melamchi Drinking Water Project. ADB’s letter comes after Minister for Physical and Works Hisila Yami’s decision to review the earlier agreement of awarding the contract of managing valley’s drinking water to UK’s Severn Trent Company.

The ADB is the leading donor of the project and has agreed to provide loan of USD 140 million for the Melamchi project.

Citing its internationally discredited image and need to maintain government/public hold on water management, Minister Yami had made the decision to review the agreement. This agreement was approved by the previous cabinet. The agreement to award the foreign company the contract to manage valley's water distribution was a precondition for the ADB to invest in the US$ 340 million project.

The Melamchi project aims to bring in 170 million litres a day (MLD) water to the Kathmandu valley. The valley has been suffering from acute shortage of drinking water – while its demands have shot up to 240 MLD, the supplies have stagnated at 90 MLD.

Meanwhile, talking to a media, minister Yami has said that she was not against the project as Melamchi was important for the long term. “Our only concern is that the government and the people should have the hold on the management of basic things like water," the report quoted Yami as saying.