India signs pacts with WB for water supply, sewerage service

New Delhi The Central Government, the Himachal Pradesh government and the World Bank on Friday signed a 40 million-dollar loan agreement to help bring clean and reliable drinking water to the citizens of the Greater Shimla area, who have been facing severe water shortages and water-borne epidemics over the past few years.

The Shimla Water Supply and Sewerage Service Delivery Reform Programmatic Development Policy Loan-1 are expected to improve water supply and sanitation (WSS) services in and around the hill city.

Shimla’s water supply infrastructure with a capacity of 40 million litres daily (MLD) is unable to meet the current demand of 56 MLD. As elsewhere in urban India, around half the available water is lost to leakages and unauthorized siphoning. As a result, water supply reaches citizens only once in two days and for limited hours. With at least 30-40 per cent of the city’s population of around 200,000 not covered by the sewerage system, sanitation has also emerged as a public health issue in Shimla.

The Bank-supported project, the first in a series of three development policy loans (DPL), will support the Himachal’s programme of policy and institutional reform needed to bring continuous, pressurised (24×7) water supply, efficient sewage collection and treatment for all households in the Greater Shimla Area.

As the first step, the state government has, jointly with the Shimla Municipal Corporation, set up a dedicated utility which will take over WSS services for the city; these responsibilities were hitherto fragmented between different agencies and departments, leading to blurred accountability. This utility — the Shimla Jal Prabandhan Nigam Ltd or SJPNL – will run the city’s WSS system. Policy decisions such as setting water tariffs and subsidies will be done by the State Government and the City Municipality.

The World Bank DPL will support SJPNL in its policy and institutional reform program as it launches three critical operations to improve WSS services in the state capital bringing bulk water to Shimla from a new source on the Sutlej River; 24×7 Water Supply and Sewage Management for Shimla City and; Sewage services for peri-urban areas. It will also support capacity building for the Shimla Municipal Corporation to take on its new role of oversight.

The state has also decided to strengthen the financial sustainability of WSS operations in Shimla where only 12 per cent of the costs needed to operate and maintain the WSS system are recovered from customers, requiring the Government to provide an average annual subsidy of over 12 million dollars.

The 40 million dollars loan from the International Bank for Reconstruction and Development (IBRD), has a four-year grace period and a maturity of 15.5 years.

The loan agreement was signed by Department of Economics Affairs Additional Secretary Sameer Kumar Khare on behalf of the Central Government and World Bank Country Director Junaid Kamal Ahmad on behalf of the World Bank. The project Agreement was signed by Himachal Urban Development Department Principal Secretary Prabodh Saxena on behalf of the state government and Mr Ahmad on behalf of the World Bank.

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