ADB grants USD 75 million loan for Karnataka urban water management program

The Government of India and Asian Development Bank (ADB) signed an agreement on Tuesday for USD 75 million loan and USD 1.8 million grant which will facilitate in improving water resource management in three towns of Karnataka in the Upper Tungabhadra sub-basin.

This loan from the ADB's Ordinary Capital Resources has a 25-year term including a grace period of five years.

This first tranche of the loan under the Karnataka Integrated Urban Water Management Investment Program will help in expanding and upgrading urban water supply and sanitation infrastructure; improving water resource planning, monitoring and service delivery; and strengthening operational and administrative capacity in the three towns of Byadagi, Davanagere and Harihar.

Tarun Bajaj, Joint Secretary, Department of Economic Affairs at the Ministry of Finance, signed the agreement on behalf of Government of India, and Rajeev Singh, Officer-in-Charge of ADB's India Resident Mission, signed the agreement on behalf of ADB.

Speaking on the occasion, Bajaj said he was happy to note that this project will help increase water treatment capacity by 15,000 cubic meters per day; help expand and upgrade more than 1,000 kilometers of water pipelines, and increase sewage treatment capacity by 48,000 cubic meters per day, thereby promoting water efficiency and environmental protection.

Rajeev Singh, said that the project will pioneer the establishment of Urban Local Bodies Incentive Fund to assist towns in implementing reforms and mainstreaming the use of performance-based contracts in ensuring continuous water services.

He said that the project will also test the application of output based approaches to support program for poor and vulnerable households.

The investment program aims to improve water resource management in urban areas in a holistic and sustainable manner. Investment support will be provided to modernize and expand urban water supply and sanitation (UWSS) while strengthening relevant institutions to enhance efficiency, productivity and sustainability in water use.

Innovative instruments, such as public-private partnership (PPP) or reform oriented incentive funds will also be pursued. The program will seek to assist more fragile environments increasingly affected by water resource degradation, often located in North Karnataka.

It will also promote climate-resilient development, capacity-development for conducive adaptation.