The Tranche 2 loan is part of the USD 200 million Multi-Tranche Financing Facility (MFF) for Bihar Urban Development Investment Program that was approved by ADB in 2012, to provide sustainable urban infrastructure and services in four towns - Bhagalpur, Gaya, Darbhanga, and Muzaffarpur.
Project 2 will improve access to better quality and sustainable water supply, for people of Bhagalpur and Gaya. It will also promote better water management practices that will result in city-wide coverage with 24-hour uninterrupted supply of treated water in both cities.
Further, loan finances will support civil works sub-projects and would benefit 1.1 million people in two project towns with increased coverage of treated water supply by 2021.
It will also support train 400 urban local body (ULB) staff in the management and operation and maintenance (O&M) of water supply systems, and help ULBs improve technical and financial management of the water supply operations.
The investment program will assist ULBs in designing affordable tariffs for O&M cost recovery.
Ministry of Finance stated that the loan will have a 25-year term, including a grace period of five years, an annual interest rate determined in accordance with ADB's lending facility based on the London inter-bank offered rate (LIBOR), and a commitment charge of 0.15 percent per year.
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