$60 m additional loan for water supply project

MANILA, PHILIPPINES - The ADB is lending an additional US$60 million to support a project that is helping increase access of the poor in three provinces in the country to safe water and sanitation.

The loan will help the Secondary Towns and Rural Community-Based Water Supply and Sanitation Project, approved in 2003 with a $60.3 million loan, achieve its objective of bringing clean water to nearly a million people and better sanitation to more than 170,000 people.

The project is providing water in four urban areas - Batticaloa and Mutur in the North-East province, Polonnaruwa in the North Central province and Hambantota in the Southern Province. Most people in these areas are vulnerable due to years of conflict and the impact of the December 2004 Indian Ocean tsunami disaster.

The project is also carrying out a rural water supply program in the North Central and North-East province, and is helping the National Water Supply and Drainage Board improve its operational and financial efficiency.

"By improving access to safe water and sanitation, thereby decreasing waterborne diseases and reducing the amount of resources spent on these, the project is helping reduce poverty and promote human development," said Tatiana Gallego-Lizon, an ADB Urban Development Specialist.

Project costs are exceeding the original estimate because of a rise in prices of construction materials particularly after the tsunami, underestimation of some costs during appraisal, engineering and design modifications, and increases in government taxes and duties. From $86.3 million, the project is now estimated to cost $175.2 million.

"Without additional loans, the project would be unable to meet its objectives," Ms. Gallego-Lizon said.

The new loan will comprise a $46.5 million loan from ADB's concessional Asian Development Fund (ADF), and $13.5 million from its ordinary capital resources (OCR).

Of the ADF loan, $18.5 million will come from unutilised amounts of closed loans to the Government.