DUSHANBE, February 9, 2010, Asia-Plus  - The European Bank for Reconstruction and Development is intensifying municipal operations in Tajikistan.

A trilateral agreement on providing a US$4.2 million capital grant to support the project for improvement of the water supply in southern Tajikistan was signed in Dushanbe on February 8, according to the Ministry of Finance (MoF).

The agreement was inked by Mr. Ulf Hindstrom, Head of the EBRD Resident Office in Dushanbe, Mr. Safarali Najmiddinov, Minister of Finance of Tajikistan, and Mr. Rahmat Bobokalonov, Director General State Unitary Enterprise Khojagii Manziliyu Kommunali (KMK), the country’s state-owned agency responsible for basic municipal services.

We will recall that last year, the EBRD provided a $2 million loan to Khojagii Manziliyu Kommunali to improve the water supply in southern Tajikistan.  The loan is being used to finance priority investments in the cities of Danghara, Kulob and Qurghon Teppa.  The project is supported by a $4.2 million capital grant provided by the EBRD Shareholders’ Special Fund and has also received significant technical co-operation funds for preparation and implementation.

The project builds on the Bank’s previous experiences in the Tajik water sector. After the successful implementation of a program of improvements in Khujand the EBRD was approached by the government of Tajikistan to expand its municipal water infrastructure program to smaller cities in more remote areas.

The new project in the south of the country is a first step in this direction.  Danghara has a population of 21,000 and is constantly facing acute water shortages due to inadequate and decaying infrastructure. Kulob is an important center for commerce with a population of more than 90,000 and an additional 85,000 living in surrounding rural settlements.  Kulob has excellent, yet poorly used water resources. Qurghon Teppa is an industrial center and home to some 70,000 people.  Despite recent efforts to improve services, the water and wastewater infrastructure condition remains in poor condition.

The EBRD loan and the donor’s contribution will not only finance infrastructure investments.  At a later stage the gradual introduction of a new tariff policy will help the local water companies to cover operating costs and generate income, while protecting low income households.  Cost reductions, efficiency measures and transparency will in a further step lead to performance improvements of the water companies.

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