Essential infrastructure and services will be improved in nine urban areas of Nepal with the help of a loan for US$30 million equivalent approved by the Asian Development Bank (ADB), the Bank said.

The Urban and Environmental Improvement Project will target towns in the central region with populations ranging from 12,000 to 89,000 and will focus on institutional strengthening, infrastructure improvements, and poverty reduction.

It is aimed at reducing disparities between Kathmandu Valley and other areas. It also desired to reduce migration to the capital region.

Although Nepal is still one of the least urbanized countries in Asia, its urban population is forecast to rise to 6.8 million, or 23% of the population, by 2011 from the present 14%.

This puts increasing pressure on the urban environment and services. Urban land is being polluted by haphazard disposal of waste and aggravated by uncontrolled growth. Other problems are lack of adequate sanitation, which leads to pollution of surface water and groundwater.

The project will consist of four main parts:

Institutional strengthening in the nine towns through technical training for municipal staff.  Upgrading urban infrastructure, including roads, sanitation, drainage, and water supply facilities. Sanitation and wastewater management will include expansion of sewerage pipe networks and simple wastewater treatment plants.

Supplementary urban facilities, including public toilets, waste collection points, landscaping of public places, and improvements to neighborhood lanes, sports grounds and parks.  Public health awareness campaigns, especially targeting women through the production of information materials, public service announcements on local TV and radio, and schools.

The project will also support the Government’s decentralization policy, helping to establish financially and institutionally self-sustainable water supply utilities in two of the municipalities, and regionally integrated water supply services in three adjacent municipalities.

“As the first decentralized urban project for Nepal, it is blazing a trail for similar projects to follow,” says Keiichi Tamaki, an ADB Urban Development Specialist.

“The project is taking a least-cost approach and harnessing synergies between the main urban areas and the surrounding rural areas within the municipalities wherever possible.”

About 320,000 residents in the nine urban areas will benefit from improved personal hygiene, sanitation, and overall better quality of life as a result of the project.

The total project cost is estimated to be US$37.5 million, of which the Government will provide US$4.4 million and the project towns with private sector participation will generate US$3.1 million.

ADB’s loan comes from its concessional Asian Development Fund, with a 32-year term, including a grace period of eight years. Interest is to be charged at 1% per annum during the grace period and 1.5% per annum subsequently.

The executing agency for the project, which is due for completion by end-September 2009, is the Ministry of Physical Planning and Works.