ADB pumps in additional US$ 60 mn for water project due to cost overruns

December 13, 2006 (LBO) – A sudden rise in construction prices, government duties and taxes, has forced the Asian Development Bank to stump up an extra 60 million dollars to improve water and sanitation conditions in conflict and tsunami hit regions, the bank said Wednesday.

Mooted under the Secondary Towns and Rural Community based Water Supply and Sanitation project, the funds will bring clean water to nearly a million people and better sanitation to over 170,000 residents, the Manila based lender said.

Project costs…exceeded the original estimate because of a rise in prices of construction materials particularly after the tsunami, underestimation of some costs during appraisal, engineering and design modifications, and increases in government taxes and duties. From 86.3 million dollars, the project is now estimated to cost 175.2 million dollars, the lender said.

Without additional loans, the project would be unable to meet its objectives, Tatiana Gallego-Lizon, an ADB Urban Development Specialist explained.

The project aims at providing water in four urban areas – Batticaloa and Muttur in the North-East province, Polonnaruwa in the North Central province, and Hambantota in the Southern Province.

Most of the people in th