Published Date : 2019-05-03 (Modified Date : 2020-07-02)

Urban Water Supply and Sanitation (Sector) Project

Project Description

ADB has supported the government in improving water supply and sanitation services in 70 of the 176 small towns in Nepal through three small towns projects introducing continuous water supply, meeting national quality standards, and providing universal householdconnections with subsidized connections and affordable supply for poor and vulnerable households.

Project Rationale and Linkage to Country/Regional Strategy

The Urban Water Supply and Sanitation (Sector) Project will support the ongoing efforts of the Government of Nepal to provide better access to water supply and sanitation services to the growing urban population. Building upon the successful implementation of earlier interventions, the project will fund physical investments in water supply and sanitation infrastructure and non-physical investments to improve service regulation, governance, and user participation in selected municipalities, previously referred to as small towns.



The project will support Nepal in expanding access to community-managed water supply and sanitation (WSS) in 20 project municipalities by drawing on experiences and lessons from three earlier projects funded by the Asian Development Bank (ADB).The project will finance climate-resilient and inclusive WSS infrastructure in project municipalities and strengthen institutional and community capacity, sustainable service delivery, and project development.

Urbanization: Since the establishment of 276 urban municipalities in 2015, 58% of Nepal’s population of 29 million is urban.Rapid urbanization—resulting from migration, reclassification, and natural increase—has widened the urban infrastructure deficit. Unmanaged urban growth and lack of improved WSS have led to environmental degradation, public health risks, increased vulnerability to the impacts of climate change and natural hazards, a rise in urban poverty, and hampered economic growth. Since 2000, Nepal has made strong efforts to improve access to WSS. It increased water supply coverage from 73% to 84% and basic sanitation5 from 30% to 81% between 2000 and 2015.Yet, in 2016 only 34% of water supply was reported to be safeand only 15% met the national water quality standards. More efforts are also needed to achieve improved sanitation: only 34% of urban households have septic tanks and only 15% have sewer connections. Fecal sludge management and sanitation for marginalized groups, especially for women and poor households, remain a challenge.Overall, municipalities find it difficult to provide adequate, cost-effective services because they lack funds, skilled personnel, and sufficient operation and maintenance (O&M) budgets.

Sector policy and institutional arrangements: The government targetsfor WSS services focus on inclusive development to improve functionality, enhance service levels, and expand municipal sanitation.The government has defined institutional responsibilities and service delivery mechanisms in the sector. The Ministry of Water Supply (MOWS) is responsible for planning, implementation, regulation, and monitoring of WSS; its Department of Water Supply and Sewerage (DWSS) supports the provision of WSS facilities in municipalities where large utilities do not exist, and these are operated by water users and sanitation committees (WUSCs)or municipalities.

Recently, the Local Governance Operation Act, 2017, entrusted municipalities with responsibility for WSS services. While municipalities’ capacity for this responsibility is being built, the government and residents have been receptive to a decentralized, participatory, and cost-sharing service provision model through water users associations (WUAs) and WUSCs. Development support for municipal WSS has been channeled through a combination of (i) government grants through DWSS, (ii) loans by the Town Development Fund (TDF),and (iii) contributions from municipalities and beneficiaries.

Past support for water supply and sanitation: ADB has successfullysupported the government in improving WSS services in 70 small townsthrough three projects, introducing continuous water supply and providing universal household connections including subsidized connections and affordable supply for poor and vulnerable households.The “small towns model” developed with ADB support involves (i) a demand driven cost-sharing approach that strengthens ownership and inclusion of women and marginalized groups; (ii) use of explicit, performance-based subsidies to deliver services to poor and vulnerable groups; (iii) use of a participatory financing mechanism with partial investment cost recovery; (iv) introduction of tariffs that allow to recover operation and maintenance (O&M) and debt service costs; and (v) WUSCs as service operators.The model is considered successful by the government and development partners. ADB also significantly supported urban WSS in water-stressed Kathmandu Valley, which includes tapping additional water from Melamchiriver through a 26-kilometer (km) diversion tunnel.

Value addition: The project will build on previous ADB interventions in the sector. It will apply the ‘small towns’ model and strengthen particularly (i) technical robustness, (ii) institutional capacity focusing on project municipalities and WUSCs, (iii) long-term operational sustainability, and (iv) climate-resilient approachesand smart technology application.To overcome startup delays, the project will assist project development by supporting the detailed designs of WSS 3 subprojects for (i) urban areas in Kathmandu Valley not previously covered, and (ii) for newly established provincial capitals and district headquarters. The project is aligned with the government’s sector policies, ADB’s Urban and Water Operational Plans, ADB’s Water for All Policy, and the Sustainable Development Goals 5 (gender equality), 6 (clean water and sanitation), and 13 (climate change).

Impact and Outcome

The project is aligned with the following impact: quality of life for urban population, including the poor and marginalized, improved through the provision of sustainable WSS services.The project will have the following outcome: inclusive and sustainable access to WSS services in project municipalities achieved.


Project Outputs

Output 1: WSS infrastructure in project municipalitiesimproved. The project will support the following: (i) 1,600 km of water supply pipes installed or rehabilitated; (ii) 15 water treatment plants, with an estimated capacity of at least 0.6 million liters per day each, constructed; (iii) 66,000 connections for households to piped water supply, with subsidized connections for 8,000 poor and 2,000 vulnerable households (including 100% poor households headed by women); (iv) 8,000 toilets constructed through output-based aid for poor and vulnerable households; (v) 20 public toilets that are suitable for both genders as well as the disabled constructed, with septic tanks; (vi) two decentralized wastewater treatment plants constructed and operational; (vii) 30 km of stormwater drainage constructed; and (viii) climate and disaster risks factored in design of subprojects, as necessary.

Output 2: Institutional and community capacities strengthened. The project will accomplish the following: (i) water, sanitation and hygiene plans including priority investments in 20 project municipalities prepared and approved by the municipalities; (ii) 20 WUAs registered and 20 WUSCs formed with at least 33% women members and at least one woman in a key post; (iii) business plans and tariff guidelinesprepared for project WUA and municipalities with support from the TDF and the Institutional Support and Service Advisory unit (ISSAU) of DWSS; (iv) at least 15 climate-resilient WSS subprojects for future investments prepared; (v) at least 200 staff (at least 66 of them women) of the DWSS, TDF, project WUAs, and project municipalities report stronger technical knowledge of smart utility management and leadership; and (vi) at least 100,000 people (at least 50% of them women) covered by awareness campaign on water conservation practices and sustainable hygiene behavior and 80% report greater awareness.

The project meets the requirements of the proposed sector lending modality because (i) it has a large number of subprojects; (ii) the government has a sector development plan to meet the priority development needs of the sector, and the institutional capacity to implement the plan; and (iii) the policies applicable to the sector are appropriate and will be improved, if warranted. The project will support the government in implementing key sector reforms.

Subprojects will be demand driven by WUAs and municipalities, and selected based on transparent criteria including population growth, poverty index, existing WSS infrastructure.


Urban Water Supply and Sanitation (Sector) Project
Details of Procurrement Package
Package Subproject
W01 Charikot (Dolakha) Water Supply and Sanitation (Sector) Project, Dolakha
W02 Bhojpur (Bhojpur) Water Supply and Sanitation (Sector) Project, Bhojpur
W03 Siddhanath Baijanath Water Supply and Sanitation (Sector) Project, Kanchanpur
W04 Diktel (Khotang) Water Supply and Sanitation (Sector) Project, Khotang
W05 Ilam (Ilaam) Water Supply and Sanitation (Sector) Project, Ilam
W06 Liwang Water Supply and Sanitation (Sector) Project, Rolpa
W07 Chainpur (Bajang) Water Supply and Sanitation (Sector) Project, Bajhnag
W08 Khalanga (Darchula) Water Supply and Sanitation (Sector) Project, Darchula
W09 Shubhaghat  Water Supply and Sanitation (Sector) Project, Surkhet
W10 Pragatinagar  Water Supply and Sanitation (Sector) Project, Dang
W11 Brihat Bhanu (Tanahu) Water Supply and Sanitation (Sector) Project, Tanahu
W12 Kanchanrup (Saptari) Water Supply and Sanitation (Sector) Project, Saptari
W13 Rampurtar (Okahaldunga) Water Supply and Sanitation (Dropped)
W14 Panchkhal (Kavre) Water Supply and Sanitation (Sector) Project, kavrepalanchowk
W15 Sharadanagar (Chitwan) Water Supply and Sanitation (Sector) Project, Chitwan
W16 Deurali Hupsekot (Nawalpur) Water Supply and Sanitation (Sector) Project, Nawalpur
W17 Madi Palpa Water Supply and Sanitation (Sector) Project, Palpa
W18 Tikapur Storm Water Drainage and Faecal Sludge management Project, Kailali
W19 Charikot: DEWATS *
W20 Dadhikot (Bhaktapur) Water Supply and Sanitation (Sector) Project, Bhaktapur
W21 Bhojpur Bazar DEWATS *
W22 Katahariya (rautahat) Storm water Drainage Project, Rautahat