<div><h4>Description</h4><p><p>Spanning more than 165,000 square kilometers, the RK covers the entire northwestern extremity of Uzbekistan. It has a dispersed population of about 1.8 million, and its primary economic drivers are agriculture, natural gas, and minerals. The RK's natural environment is primarily arid desert comprising sparse, barren lands that are subject to severe drought. As such, the RK suffers from acute surface water shortage. Although aquifers exist, the groundwater is mostly saline and of limited value, as it is prohibitively expensive to treat for human consumption. Water supply conditions are therefore critical.</p><p>Municipal water supply services in the RK are provided by a regional WSS utility, the State Unitary Enterprise Department for Operation of Interregional Water Supply Tuyamuyun-Nukus (TN). Although operational, TN faces considerable challenges as most of its Soviet-era infrastructure has depreciated to the point of dilapidation. Its services are unreliable, leakage losses are high, and water quality is a growing concern. These deficiencies prevent TN from delivering services that meet regulator and public expectations, which in turn undermines consumer confidence and willingness to pay, increases regulator reluctance to raise tariffs, and reduces financial and institutional performance. As with similar utilities in Uzbekistan, has become locked in a vicious cycle that requires external intervention to modernize and expand its asset base while overhauling its institutional capacity.</p><p>TN's service deficiencies relate directly to poor WSS sector performance. In the RK, only 36.6% of the population in Karakalpakstan12.9% in rural areasis connected to the centralized water supply system. Recent surveys indicate that 40% of households receive water for less than 6 hours per week and that water pressures are often low. About 75% of households reportedly experience excessive water salinity and hardness issues. Correlations are also frequently drawn between poor water quality and waterborne disease incidence. The substantial consumer base that is yet to be connected to a centralized water supply is forced to purchase water from trucked supplies at exorbitant prices or consume water that is increasingly polluted. </p><p>The government fully recognized the sector constraints and, with support from the Asian Development Bank (ADB) and other development partners, has responded by implementing a phased, nationwide institutional consolidation and sector-wide management, financial, and cost recovery reform program. The initial phase, driven largely by the Decree of the Cabinet of Ministers No. 306, has led to the consolidation of Karakalpakstan's WSS services into TN and the implementation of more than 40 time-bound corporate governance improvements to strengthen utility capacity. The second phase is overhauling the wider institutional framework by creating the Ministry of Housing and Communal Services (MHCS). The Agency Kommunhizmat (CSA), reporting to the MHCS, is responsible for implementing externally funded projects including those funded by ADB. </p><p>The project supports the government's WSS reform program by helping improve TN's institutional capacity while revitalizing its regional water supply system. It will benefit 388,000 inhabitants in six districts and 116 rural settlements by providing reliable and safe water supply through universal metered household connections. It is consistent with ADB's Water Operational Plan, 20112020 and country operations business plan, 20182020 for Uzbekistan. </p><p>Lessons to be incorporated in the project design include (i) securing timely counterpart support by engaging government agencies at the early stage of project preparation, (ii) improving project quality and efficiency by adopting least-cost solutions in project design, (iii) providing training and capacity building of project implementation personnel to reduce procurement and construction delay, and (iv) accelerating domestic approval procedures by engaging design institutes during project preparation.</p></p><h4>Impact</h4><p><p>Climate resilience, health, and living conditions in the Republic of Karakalpakstan improved</p></p></div>

Western Uzbekistan Water Supply System Development Project

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Western Uzbekistan Water Supply System Development Project: Audited Project Financial Statements January-December 2022

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