In order to finance water supply and improve and expand water supply in Bhagalpur and Gaya towns in Bihar, ADB and the Government of India has signed a $84 million loan. The loan was approved by the ADB Board of Directors in 2012 and is the tranche 2 loan which is the part of the $200 million multi tranche financing facility (MFF) for Bihar Urban Development Investment Program. Bihar Urban Development Investment Program is aimed to provide sustainable urban infrastructure and services in four Bihar towns namely Bhagalpur, Gaya, Darbhanga, and Muzaffarpur.
According to Sameer Kumar Khare, Joint Secretary (Multilateral Institutions), Department of Economic Affairs, Ministry of Finance, who signed the loan agreement for the Government of India:
“The Project 2 will improve access to a better quality water supply for the people of Bhagalpur and Gaya towns. It will also promote better water management practices that will result in citywide coverage with 24-hour uninterrupted supply of treated water of 135 liters per capita per day in both cities.”
Kenichi Yokoyama, Country Director of ADB’s India Resident Mission, who signed the agreement for ADB added the following:
“The loan finances will support civil works subprojects and would benefit 1.1 million people in the two project towns with increased coverage of treated water supply by 2021; 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 program is aimed to make the two towns of the project achieve the national urban service goals or match many of the national averages for urban service delivery performance in India. The program is also expected to assist ULBs in designing affordable tariffs for O&M cost recovery. With a grace period of 5 years, the loan will have a 25 year maturity with annual interest rate based on the London interbank offered rate (LIBOR) and a commitment charge of 0.15% per year.
Established in 1966 and based in Manila, ADB is set to reduce poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and region integration. Owned by 67 members out of which 48 were from the region, ADB total assistance in 2016 equaled $31.7 billion including $14 billion in cofinancing.