Melamchi water supply project will complete by mid-2016: ADB veep

KATHMANDU, Aug 15 :

A high-ranking official of the Asian Development Bank (ADB) insisted on Friday that the Melamchi Drinking Water Supply Project will be completed by mid-2016.

Visiting ADB vice president Wencai Zhang told media persons on Friday that they were working on 2013-2016 timeframe and that they would do the needful to avoid any delays in the coming days to complete the project within the stipulated timeframe.

“There was some delay in the beginning. But we took major steps in the contract and bidding process and also selected an Italian contractor to develop the project,” added Zhang.

Earlier, the government had terminated contract with China Railway 15 Bureau Group - the Chinese contractor of the project - after it was dissatisfied with work progress. Later, it selected an Italian contractor to develop the much-awaited drinking water project.

ADB is one of the donors of the project.

Zhang also called on Minister for Urban Development Narayan Khadka on Friday and discussed on issues related to Melamchi and other ADB-funded projects. He is scheduled to visit Melamchi project site and other ADB-funded projects during his four-day visit to Nepal.

ADB CUTS MAJOR GRANTS TO NEPAL

Saying that Nepal has made a lot of progress in debt performance situation, ADB has cut major grants to Nepal with effect from 2014. Now onwards, ADB will only provide soft loans under instrument of Asian Development Fund (ADF).

Zhang said the multilateral donor decided to provide only ADF loan after their assessment of Nepal´s micro-economic situation, social development and country´s portfolio performance. “We decided to shift to ADF assistance after looking into different situations of the country and comparing those situation with other countries receiving fund under ADF,” clarified Zhang.

ADB was also providing grants along with loans under ADF fund. ADF annual grants funding to Nepal was about US$ 100 million till 2013. However, ADB has continued other grants under technical assistance and capacity building.

During his meeting with Zhang, Finance Minister Ram Sharan Mahat had requested the former to not cut grants under ADF, considering Nepal´s transitional situation.

ADB Country Director Kenichi Yokoyama said that they would look into the minister´s request.

“In the next five years, ADB can provide US$ 1.5 billion concessional ADF resources to Nepal to support Nepal´s economic and sector reforms, and investments in critical infrastructure such as energy, transport, urban services, and irrigation as well as in human capital development and agriculture transformation,” ADB said in a statement on Friday.

The interest rate on concesssional loan is only 1.5 percent and the maturity period of such loan is 32 years.

Meanwhile, ADB is planning to issue a local currency bond worth Rs 50 billion to finance the projects in Nepali currency, as borrowers want investment in Nepali currency to avoid foreign exchange risk. Kenichi said that the bond is in the interest of the country. ADB has already applied for issuance of the bond. It, however, has not received permission from the government.

Likewise, ADB officials also say they want to focus on private sector investment by assisting projects being under Public Private Partnership (PPP) model.

Source: Republica