Because of lack of job opportunities in the rural areas and prolonged conflict, Nepal experienced rapid urbanization from internal migration. Rapid urbanization resulted in inadequate urban infrastructure and services, including intermittent drinking water supply, poor water quality, and poor sanitation. Responding to the challenges, the government formulated in 2000 a 15-year plan for water supply and sanitation (WSS) development in small towns. A total of 265 towns ─ 153 in the Terai region and 112 in the Hill region ─ were classified in 2009 as small towns, each with 5,000−40,000 people, and a population of 3.6 million overall.
At the request of the Government of Nepal, the Asian Development Bank (ADB) supported the preparation of the Second Small Towns Water Supply and Sanitation Sector Project. The project was designed to improve the health, economic, and environmental conditions in 20 small towns in Nepal by developing affordable and sustainable WSS services, governed and managed by locally accountable representative bodies. It envisaged three key outputs: (i) efficient, effective, and accountable urban WSS sector; (ii) safe, accessible, and adequate WSS facilities; and (iii) strong capacity for project management and operation. The project embraced the community-managed and demand-responsive approach, and the community of users was expected to be involved in all aspects of planning and implementation of the town subprojects.
In September 2009, ADB approved a $45.1 million grant for the project, which was fully aligned with the government’s plan to increase access to drinking water from 76.6% in 2006 to 85% by 2010 and access to basic sanitation from 45.8% in 2006 to 60% by 2010. Two new elements were incorporated to the design: (i) output-based aid (OBA), which was to connect verified poor households to WSS services and ensure social inclusion; and (ii) technical support to WUSCs during their first year of operation to avoid technical glitches, ensure that WUSCs operated confidently, and develop capacity.
At completion, the project achieved less than 80% of its planned outputs. The Sector Efficiency Improvement Unit (SEIU) was institutionalized, water utilities adopted the Water Services Operation Directives and guidelines, and five regional laboratories were operationalized for water quality testing. Industrial wastewater standards were formulated within the project period but those for domestic wastewater standards were still being developed. The government has approved the national sewerage management policy and is formulating the guidelines, expected to be effective in 2019.
Physical infrastructure targets were achieved, in excess of targets for the installation/upgrading of water pipes and household sanitation facilities but with a 40% shortfall in household water supply connections. Sanitation facilities, including for decentralized wastewater management. were constructed in five towns, however, the only completed system is not operational, leading to the non-attainment of the target to collect 40% of wastewater in at least three towns to meet environmental standards by 2015. Water extraction, treatment, storage, transmission, and distribution facilities were constructed in all the project towns plus another.
Targets in strengthening governance for project management and operation were largely met. WUSCs raised 50% of capital funds from water users' contribution (5%) and the Town Development Fund (TDF) loan (45%) and have assumed full operation and maintenance (O&M) responsibility for the water supply systems upon completion of construction. WUSCs took guidance from TDF and set water tariffs to cover O&M costs and repay the TDF loan. However, most towns have not revised their water tariffs because of strong objections from water users, and in some cases, water tariffs were set below the TDF recommendation. Nevertheless, the tariff collection mechanism is strong, and the default rate is low at less than 5%. The punitive measure of cutting the water supply of users who have not paid within three months in most cases has served as an incentive for timely tariff payment.
The project established a collection and management system for data disaggregated by sex, caste, and ethnicity. Women's representation in WUSCs at project completion stood at 35% against the target of 33%, with up to 55% representation in some WUSCs. Ethnic minority representation in WUSCs was 27%: 23% Janajati and 4% Dalit. Overall, the WUSC composition was found to be inclusive. Against the 50% target, 65% of WUSC members participated in training on project implementation and O&M. Local nongovernment organizations in each town were engaged to raise health and hygiene awareness and the personal and hygiene behavior of the population has improved over time, as confirmed in the benefit monitoring and evaluation (BME) of five sample towns. The BME also validated the attainment of 1 of 2 project impact targets ─ the incidence of waterborne diseases has been significantly reduced and there have been no reported deaths or illnesses associated with drinking water.
The project had the Ministry of Water Supply as executing agency. The SEIU handled the sector development work under output 1, and the project management office managed the overall project planning and management of output 2. Town-level project coordination committees, chaired by the municipality mayor and including WUSC members, were established to help manage the project.
