Patching up Melamchi- Nepali Times

SAGAR SHRESTHA

After last month's bruising confrontation with a new Maoist minister over a mammoth project to augment Kathmandu's water supply (\'Troubled water,\' #350), the Manila-based Asian Development Bank (ADB) is sending a team to Kathmandu in July to study how to revive the scheme.

The ADB had threatened to walk out of the Melamchi Water Supply Project (MWSP) that it is funding by an end-June deadline, but Maoist Minister of Physical Planning and Infrastructure Hisila Yami has bought time by writing to the bank and backing down from her opposition to privatising water supply.

"The silver lining is that she is not annoyed about private sector participation," said a senior ADB official, speaking about Yami. "It was positive to hear from her that she would comply with the reforms we have introduced."

But the bank official who spoke on condition of anonymity said Yami's recent letter was not clear enough on how Kathmandu 's water supply would be managed before Melamchi came in. The bank had warned that it would pull out if the management contract for Kathmandu's water supply was not awarded to Severn Trent Water International (STWI), a British company selected for the job by the previous government (\'Private water, public debate,\' #335).

Yami had accused the previous administration of doing the selection in a hush-hush manner. The ADB had argued that the process was transparent and according to procedures, and threatened to pull out of the project if the $165 million contract was cancelled.

Nepal's biggest infrastructure undertaking aims to pipe in 170 million litres of water a day from Melamchi in Sindhupalchok district through a 27km tunnel. Yami finally wrote to Manila indicating she wanted to move ahead. But the bank set the condition that the tunnelling work could begin only after private sector management takes over Kathmandu water supply.

Yami's plan was to temporarily hand over the management of Kathmandu's water supply to an individual from the private sector before bringing in an international company through global bidding. "In line with ADB's reform policy, the Kathmandu Upatyaka Khanepani Limited (KUKL) has already been established, replacing the Kathmandu Drinking Water Supply Corporation," minister Yami told us. "Since global bidding might take almost a year, we can for now hire a financial or management expert from among overseas Nepalis or foreign experts."

But the ADB official who spoke to us said Yami had not elaborated on those plans in her recent letter to the bank. "The devil is always in the details and that is what the upcoming mission will look into." That mission should go smoothly because the bank also seems keen on not making the Severn Trent contract an issue.

Bank officials were heartened by Yami's conciliatory tone and her commitment to institutional reforms in distribution that it has backed. Said the ADB official: "This provides an opening, and we can see the light at the end of the tunnel. Now what remains to be seen is if Minister Yami tangos or not." With STWI no more an obstacle the two sides might agree on one or the other modality of water supply management. But the bank is less worried about who gets the management contract than about which government it will have to deal with in the future after patching up with the Maoists.

Said the ADB official: "We may finally reach an agreement with the Maoist minister, but what if a minister from a different party does not like the idea tomorrow?"