OREANDA-NEWS. May 12, 2009. To improve the water supply in Southern Tajikistan the EBRD is providing a US2 million loan to State Unitary Enterprise Khojagii Manziliyu Kommunali (KMK), the country’s state-owned agency responsible for basic municipal services, reported the press-centre of EBRD.

The loan will be used to finance priority investments in the cities of Dangara, Kulyob and Kurgan-Tube. The project is supported by a US 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 programme of improvements in Khujand the EBRD was approached by the government of Tajikistan to expand its municipal water infrastructure programme to smaller cities in more remote areas.

The new project in the south of the country is a first step in this direction. Dangara has a population of 21,000 and is constantly facing acute water shortages due to inadequate and decaying infrastructure. Kulyob is an important centre for commerce with a population of more than 90,000 and an additional 85,000 living in surrounding rural settlements. Kulyob has excellent, yet poorly used water resources. Kurgan-Tube is an industrial centre 100 km south of the capital Dushanbe 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.

Matthieu Le Blan, head of the EBRD Resident Office in Dushanbe, said “the project will have a large beneficial impact on the lives of many people who so far have been suffering from insufficient water services. By gradually bringing the operations in the three cities towards market-based operations, the project will also lay the foundations for their sustainability.”

To-date, the EBRD has invested more than US 100 million in more than 35 projects in Tajikistan. The country is part of the Early Transition Countries Initiative which aims to stimulate market activity by using a streamlined approach to financing more projects, including smaller ones, mobilising more investment, and encouraging economic reform.