ADB approves two loans to support urban water supply and wastewater upgrades in Rajasthan, India

Asian Development Bank (ADB) has signed two loans worth $500m with the Government of India to help the Indian state of Rajasthan with better management of essential urban services and for financing water supply and wastewater upgrades.

The loan, granted for the Rajasthan Urban Sector Development program, signifies the first chance for ADB to combine a policy loan aimed at urban sector reforms with a project loan aimed for long term urban service developments.

ADB country director for India M. Teresa Kho said: "Rajasthan is urbanizing rapidly. The program aims to strengthen urban institutions in Rajasthan to improve their governance, and better manage urban services.

"It also aims at boosting the water supply in five cities from two hours per day to 24-hour supply, and increasing collection and treatment of sewage and septage waste."

Indian Ministry of Finance Department of Economic Affairs joint secretary (Multilateral Institutions) Raj Kumar said: "The Sector Development Program modality will support both the infrastructure needs and the reform program.

"The policy-based loan will provide financial support to the state government to implement reforms that will help municipal bodies, individual households and private sector investors.

"The project loan will support investments to improving urban services in six cities with provision of long-term operation and maintenance embedded construction contracts for nonrevenue water which is an innovative mechanism."

Government of Rajasthan will use 50% of the funds offered as policy loan to set up a corporate-style state body for promoting urban services development and an independent utility in Jaipur which will look after its water and wastewater operations.

The remaining $250m, which has been offered as project loan, will be used to improve water systems in five cities of Hanumangarh, Jhunjhunu, Pali, Sri Ganganagar, and Tonk in the state.

The cities presently have low piped water coverage and experience increases water losses, which cane be eliminated through installation of proper metering. Around 200,000 new house connections will also be set up as a part of the upgrade program.

The funds will also support upgrades for sewage pipes and treatment plants in six cities, including those five and Bhilwara. Plans also involve placement of wastewater recycling schemes in order, and sludge treatment for power generation.

Separately, the ADB has also granted a $100m loan financing to mitigate the environmental and public health concerns caused by widespread water pollution and flooding in the Enshi Tujia and Miao Autonomous Prefecture in the China’s Hubei Province.

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Image: The program aims to boost the water supply in five cities from 2 hours a day to 24-hours. Photo: courtesy of Asian Development Bank.