A country so rich in water resources has been a chronic failure in ensuring proper drinking water for citizens. Forget about the rest of the country, it can't do so in its own capital.

It doesn't matter whether a cat is black or white as long as it catches mice. It hardly matters who manages the water system for Kathmandu as long as the people get a reliable and affordable supply.

The Nepal Water Supply Corporation (NWSC) is getting most of the flak for mismanaging water supply. There are many countries in the world where public enterprises are as successful as private ones. Not so in Nepal. Most government corporations here have accumulated huge losses, their net worth is mostly negative.

Political interference is usually the reason. The board of directors are packed with cronies and there is non-transparent, non-competitive selection of chief executives who stay as long as their political bosses are around. Politicians use public enterprises as recruitment centres and as a source of perks and pelf for themselves and their kith and kin. Bottom line: most corporations lack corporate governance.

In order to insulate public sector enterprises from these evils, Kathmandu-based multilaterals have a standard prescription: foreign management. Two of Nepal's largest banks were handed over to outside managers under the financial sector reform with ambitious targets to be achieved in two years. Five years down the line and after spending Rs 7 billion of borrowed money, these banks have not shown substantial improvement. On Melamchi, the Asian Development Bank (ADB) has made funding of Melamchi conditional on the government handing over management of NWSC to foreign management.

The debate today is not for or against the Melamchi project. The government seems to be all for it. Yet, the ADB wants Kathmandu Valley's water supply to be managed by Severn Trent Water International Ltd, or else. Certain politicos and bureaucrats involved in selecting Severn Trent agree fully with the ADB. Whatever one may think about minister Hisila Yami, she raises valid questions about this deal.

Severn Trent was the only bidder in all four rounds of the selection process, which was a one-horse race. The problem must lie in the criteria that enabled only one bidder to participate. If there was only one bidder, the net should have been cast wider.

But that is not the only problem dogging Melamchi today. Unfortunately for Severn Trent, it has been under a dark cloud in countries ranging from UK to Guyana, thus casting doubts on the ADB's reasons for favouring a discredited company.

It is now time for sanity to prevail. To preserve its own reputation it is not advisable for the ADB to back a questionable party and threaten to withdraw support for Melamchi unless Severn Trent is involved in the project. Now that Severn Trent has withdrawn its bid without even consulting ADB, there is a way forward.

Now, the criteria for the next selection process should be fine tuned so there are more bidders (one week's job), solicit international competitive bids (35 days) and select a party that is not blacklisted anywhere (a month). In this manner we can have an alternative party to work as management contractor in less than three months.

It's a win-win-win. The selection procedure will be kosher, the ADB will come out of it with its reputation largely intact and maybe (just maybe) Kathmanduites will get clean water in four years. It's time to stop over-reacting on this long-delayed project and get on with the job.

Ratna Sansar Shrestha is an economic/financial analyst working in the water resource sector.

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