After years of slow motion, the Melamchi project has finally ground to a complete halt. The ambitious $464 million scheme to bring glacial melt water to parched Kathmandu through a 28km tunnel is Nepal's biggest infrastructure project, and authorities say it is now on hold because of Maoist threats.

Officials from the Melamchi Water Supply Project (MWSP) said their staff had to return to Kathmandu this week after Maoists ordered them to stop work. "The Maoists pasted notices on walls, and we just can't compromise on the safety of our staff," one official said. Although Maoist activity has delayed work, this is the first time the rebels have actually forced the project to stop.

The only tangible outcome of the project so far has been a 9km stretch of access road from Melamchi to the headworks of the tunnel in Helambu. The international contractor, Hanil Koneko, has already been paid nearly 30 percent of its fee for less than 15 percent of the finished road.

The controversial Melamchi project aims to pipe 170 million litres of water a day to Kathmandu. Critics and experts have charged that it is too expensive, and will only benefit an already pampered capital. They also say cheaper options of storage reservoirs on the Valley rim and upgrading the water supply system should have been the priority.

The Asian Development Bank, Japan, Norway and Sweden are among those supporting the project. With MWSP in limbo, the government is now shifting its attention to the Kathmandu Valley Water Optimisation Program. Based on a Japan Bank of International Cooperation report, the focus has shifted to reforms in the water supply system within Kathmandu. "Under this plan, we will make new reservoirs, correct the pipe network and other reforms," says MWSP Executive Director Dhruba Bahadur Shrestha. "For that, we will cut down the number of reservoirs to be built outside Kathmandu for the Melamchi project." Kathmandu loses more than 40 percent of its water due to an outdated and faulty water pipe system.