The Asian Development Bank (ADB), largest donor for the Melamchi project, will extend its loan commitment to the project for three more months after the existing commitment expires on September 30. An ADB mission that arrived in Kathmandu on September 5 took this decision Monday.
"The bank has agreed to extend the loan for three more months till December-end," said the project's recently appointed executive director, Hari Ram Koirala. "The mission has also agreed to ask the bank, at its board meeting scheduled for November 23, to release the funds for the project," Koirala added.
Koirala further said that "no issues" remain now between the bank and the project. "All obstacles have been cleared (for the project to move ahead)," Koirala said.
The ADB had grudgingly extended its loan to the project for three months after the first commitment expired at June-end this year. Before extending the loan commitment, the bank had repeatedly warned that it would pull out of the project if the government did not appoint a management contractor for Kathmandu Valley's water utility by June-end, a key point in the loan agreement signed in 2001.
The bank had taken this stand after a decision by Minister for Physical Planning and Construction Hisila Yami on May 8 to suspend the contract awarded to UK firm Severn Trent Water International (STWI) for managing Kathmandu Valley's water supply resulted in STWI's withdrawal on May 21. STWI was the sole bidder for the contract.
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