Melamchi Water Supply Project Nepal Loan Appraisal Mission Report

Abstract

This is an appraisal of the Melamchi Water Supply Project in Nepal with special focus on the component earmarked for funding by NDF. The objective of the appraisal mission was to provide NDF with necessary information to support its decisions for further involvement in this project. The mission confirms that NDF's contribution will be allocated solely to the supervision of the construction of the Melamchi Diversion Scheme. This scheme consists of a water intake structure in the Melamchi River and a 26-km long tunnel for transferring of water from the river to the urban water supply system of the Kathmandu Valley. The appraisal concludes that significant progress has been made in filling the funding gaps of the Project since the last donor mission in July 2000. Moreover, all donors appears to agree that an obligatory condition for this project is the involvement of a private operator (PO) responsible for future operations and provision of water supply services. The construction supervision component of the Melamchi Diversion scheme is estimated to an upper ceiling of approximately UD$11 million including the consultant's office and transportation costs. The supervision budget is higher than the current NDF's pipeline credit for this Component and filling of the gap has to be settled. The mission also clarified that the construction supervision will be subject to Nordic Competitive Bidding. In general, considerable efforts will be needed by the Asian Development Bank and the Nepalese Governmental Institutions to complete the remaining project preparations in keeping with a tight time schedule.