IWRA Proceedings

Abstract Introduction: This paper contributes to an important insight on intersectoral and interbasin water transfer decision to mitigate the city water crises, which is also a hot politically debated issues in many places. It also summarizes issues on privatization of the city water supply scheme as condition attached for funding Melamchi water Transfer project in Nepal, which is planned to be US$470 million project to be completed by 2012, and to be funded from several donors and led by ADB/Manila. The project is in continuation stage now and even after several years of its implementation, the full funding and commitments from all the donors are still in limbo. Then, we also summarize political economic issues as well as stakeholders’ concern over the project impacts to the sustainability of the Kathmandu city water supply scheme. The improved knowledge base and information generated out of synthesis paper will be useful to the Melamchi project authority and other city water supply projects of similar nature in the developing countries. Therefore, the improved knowledge base and information generated here is expected to be useful in planning city water infrastructures in many places. Objective: The main purpose of this paper is to review and summarize key public policy issues in relation to Melamchi water transfer project and analyze some of the policy discourses in this regard. More specific objectives are: a. to document the likely impacts of the project in the donor basin and in recipient basin, and summarize the local stakeholder perspective and changing water uses situation and institutional arrangements. b. to describe the water market situation at recipient basin and current water use pattern and their willingness to pay of the consumers. c. to provide policy feedbacks to the project implementation process, in general. Methods: The study was exploratory in nature to understand various aspects of public policy and governance issues of intersectoral water transfer. It relied on exploratory and participatory data collection techniques. Content Analysis, PRA and Informal Interviews with different stakeholders of the project were applied to have a logical output for this study. The information was collected from primary and secondary sources. Results, Conclusions, and Policy Implications The privatization of the Kathamndu city water supply and institutional reform, as pre-condition set for funding the Melamchi project attached need to be done with due consideration of the local concerns, existing agency rent seeking behavior (and resistance to move such attempts), and vulnerability of the poor people both at the donor and recipient regions of water transfer process. The government and the leading donor agencies need to bring a more pragmatic solution for involving private sector operators (multinational firm) in city water supply, which also need to be done learning the experience from other countries where such water privatization has done successfully. The study findings contribute significantly in global debates on city water supply and water transfer across the sector, and increasing knowledgebase on implementing a large size water project in a developing country. Some of the policy issues are: • Privatization of water services and subsequent price hike in the recipient basin and its resistance by the present users (agency) in the donor basin, • Need to increased local participation in project and transparency during project implementation process, • As per the project funding condition, the government has to handover the city water supply system to private sector particularly to the multinationals, which has been the most contended and debated public policy issues of the project recently, • Donor’s influence on the government decision making process is also much discussed and debated, which need to be analyzed in retrospectives, • Increasing political instability and unrest are other hindrances that have also hamper smoothly implementation of this nature of large water infrastructure and its completion on time.