Union Government, ADB sign $ 84 million loan for expansion of water supply in Bihar

The Union Government signed a $84 million loan agreement with the Asian Development Bank (ADB) on February 23, 2018 to improve and expand the water supply in Bhagalpur and Gaya towns of Bihar.

The loan agreement was signed by Sameer Kumar Khare, Joint Secretary (Multilateral Institutions), Department of Economic Affairs, Ministry of Finance, for Government of India and Kenichi Yokoyama, Country Director of ADB’s India Resident Mission for ADB and Vipin Kumar, Resident Commissioner on behalf of the state government of Bihar.

The tranche 2 loan is a part of the $200 million multi-tranche financing facility (MFF) for the Bihar Urban Development Investment Program that was approved by ADB in 2012 to provide sustainable urban infrastructure and services in four towns of Bihar – Bhagalpur, Gaya, Darbhanga and Muzaffarpur.

Significance

The Project 2 will improve access to better quality and sustainable water supply for the people of Bhagalpur and Gaya towns.

It will also promote better water management practices that will result in a citywide coverage with a 24-hour uninterrupted supply of treated water of 135 litres per capita per day in both cities.

Impact

The loan will support civil works subprojects and is expected to benefit 1.1 million people in the two project towns with increased coverage of treated water supply by 2021.

It will also train 400 urban local body (ULB) staff in the management, operation and maintenance (O&M) of water supply systems.

It will also help ULBs to improve technical and financial management of the water supply operations.

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Term

The loan will have a term of 25 years including a grace period of 5 years.

Further, an annual interest rate will be determined in accordance with ADB’s lending facility based on the London interbank offered rate (LIBOR), and a commitment charge of 0.15% per year.

Conclusion

The agreement is expected to help the two towns involved in the project to achieve the national urban service goals or match many of the national averages for urban service delivery performance in India.

It is also expected to assist the urban local bodies in designing affordable tariffs for operation and maintenance cost recovery.

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