Eye of the needle

The Melamchi drinking water project, much touted to meet the needs of the water-deficit Kathmandu Valley, has been pending for nearly two decades for one reason or another, though a pretty sum, Rs. 4 billion, has already been spent in its name. The management of water distribution in the Valley was to be awarded to a foreign firm, Severn Trent Water International (ST), the only bidder for the contract. The Asian Development Bank (ADB), the main financier of the country’s biggest drinking water project, attached the loan conditionality that the Valley’s water distribution be transferred to ST, a controversial firm said to have an unsatisfactory record of performance in other countries. But the CPN-Maoist’s entry into the newly formed interim government, with the ministry concerned headed by its representative, seems to have upset the original plans.

Minister Hisila Yami has let pass the May 15 deadline ST gave the government to sign a contract with it, otherwise threatening to opt out. With the minister having second thoughts about allowing a foreign firm to manage the distribution, ADB’s loan pledge of $120 million for the project is now in serious jeopardy. ADB has threatened to end its commitment if ST does not get the contract. But Yami is reported as saying that its pullout would throw open new possibilities. The fees for the management contract, which ADB is supposed to pay ST, would stand at $8.5 million for a six-year term. The minister says she wants to go over the ST contract afresh before deciding.

Some argue that the government could not run the Valley’s water distribution satisfactorily from 1990 to 1999 despite the infusion of $100 million worth of aid, loan and technical support. ADB thought Nepal needed foreign expertise. ADB’s loan would go into the construction of the project’s costliest component — the 26.5-km diversion tunnel linking the Melamchi River in Sindhupalchok district to Sundarijal in Kathmandu — as well as into improving the Valley’s bulk distribution system. According to the state-owned Nepal Water Supply Corporation’s estimate, water waste through leakage alone stands at 40 per cent of the total supply. But the very premise that the problems of water management are one of lack of expertise is deeply flawed. It is rather one of intention, of accountability, of failure to crack down on corruption. The government agencies, including ministries and departments, and public sector undertakings face similar problems, as anybody with some familiarity with this area in Nepal would know. If one were to accept the foreign-expertise contention, one would also have to accept that many other donor-funded projects and programmes are in need of the same shock treatment. Strangely, little attention has been paid to the optimum utilisation of the available water and the existing water sources, and all attention seems to have been concentrated on mega projects costing many billions of dollars. One wonders if this has no deeper meaning and a better management of the current supply alone would not relieve the problem significantly.

Source: The Himalayan Times, May 18, 2007