Kathmandu, May 7:

The Melamchi Water Supply Project, which had been facing fund crunch time and time again, has been downsized.

Revised cost estimate of the $464 million project is said to be $371 million.

“We had to downsize the project size because of donor’s wishes and demand from local experts to opt for a cost-effective project. Since major financial hurdles have been cleared, we hope to be able to give work on the project smoothly,” said Hariram Koirala, executive director of the Melamchi Water Supply Development Board.

Talking with media persons at his office, he said out of the total budget, $249.4 million will be spent for construction (building infrastructure) in the Melamchi Valley and $67.9 million will be spent in the Kathmandu Valley on water distribution component.

Out of $249.4 million (budget for construction), $96.5 million will be spent on tunnel and head works, $61 million on water treatment plant, $38 million on Adit access roads, $30.7 million on project management support and $14 million will be used to pay interest to investors.

The Asian Development Bank has pledged to extend a loan of $137 million. The Japan Bank of International Cooperation will inject $47.5 million, Nordic Development Fund $10.5 million and Organisation of Petroleum Exporting Countries will inject $13.7 million as loan. The Japan International Cooperation Agency will provide $18 million grant. For the project, Nepal will provide $90.6 million.

Meanwhile, Purnadas Shrestha, deputy executive director of the board, said four companies, all Chinese, have filed their bidding to construct 26-km tunnel that will link the Melamchi Valley with the Kathmandu Valley for water transportation.

The companies are: China International Water and Electric Corporation, China Overseas Engineering Company Ltd, Transtech Engineering Company and China Railway 15 Bureau.

Secretary at the Ministry of Physical Planning and Works Purna Kadariya said one among the four companies will be selected by the end of this fiscal year to construct the tunnel.

The Melamchi project, started in December 2001, is expected to be commissioned by December 2013. According to officials, 16 per cent of total project work has been complete and Rs 4.6 billion spent so far.