ADB to Help Cambodia Improve Water Management, Irrigation Systems

23/09/2010

The FINANCIAL -- The Asian Development Bank (ADB) is providing loans, grants and technical assistance of nearly $34 million to help Cambodia improve the management of its water resources and to upgrade irrigation services to strengthen food security and cut poverty.

ADB’s Board of Directors on September 23 approved the funds for the $63 million Water Resources Management Sector Development Program, which includes measures to strengthen national water regulations and to improve the management of river basin resources. It also will help the Ministry of Water Resources and Meteorology rehabilitate small- and medium-sized irrigation systems within the Tonle Sap Basin. ADB will also administer a loan from the OPECC Fund for International Development, and technical assistance grants from the Government of Australia and Nordic Development Fund to support program implementation.

"Cambodia’s economy is highly dependent on water, and sustaining the water cycles in the Tonle Sap Lake and Lower Mekong delta is critical to the country’s agriculture and fisheries. With the onset of climate change, more frequent extreme weather events are likely, along with potentially worse seasonal water shortages and floods. To promote more effective water management, the Program will seek to strengthen existing legal and institutional frameworks," ADB says.

“The activities will result in improved management of water resources and more efficient and sustainable irrigation services, which will ultimately enhance food security and support government efforts to reduce poverty and stimulate economic development,” said Christopher Wensley, Lead Professional (Water Resources) in ADB’s Southeast Asia Department.

The program component will support the government’s Strategy on Agriculture and Water, with outputs to include strengthening the policy, regulatory and institutional environment to improve coordination and collaboration on water resources among government agencies. It will also build the capacity of the Ministry of Water Resources and Meteorology to manage irrigation services. ADB will finance these activities through a program loan of $20 million equivalent from its concessional Asian Development Fund, which will be released in two tranches over a 24-month period. The loan has a 24-year term, including a grace period of 8 years. Annual interest is charged at 1% during the grace period, rising to 1.5% a year for the balance of the term.

The project component will rehabilitate and upgrade about 15,000 hectares of small- and medium-sized irrigation schemes within the Tonle-Sap basin provinces of Kampong Thom, Banteay Meanchey and Siem Reap. ADB will provide a loan of $10 million equivalent and a grant of $2.8 million from the Asian Development Fund. The project loan has a 32-year term, with the grace period and interest on a par with the program loan.

The OPEC Fund for International Development is extending a $12 million loan, along with $6.36 million from the Government of Cambodia, and $760,000 from beneficiaries, for a total project investment cost of almost $32 million. The Ministry of Water Resources and Meteorology is the executing agency for the project, which is expected to be completed by December 2017.

The technical assistance package of $11.2 million, including $1 million from ADB’s Technical Assistance Special Fund, and grant contributions from Australia and the Nordic Development Fund, will be used to help implement agreed policy actions, to support training in water resources management and provide capacity building in target institutions.