Phil Bowen, ADB Executive Director based in Manila said the project which will be implemented in the next four to five years will be in the amount of $16 million.
The loan will be able to help Palau put up water metering system all over Koror and Airai and eventually in other states to ensure a more efficient consumption and prevent leaks.
Under the project, Palau will be establishing a Water Supply and Sewage System Authority to effectively manage the utilities.
Bowen said the government spends at least $3,000,000 to run the country’s water and sewage system.
The revenues from water fees meanwhile is only $700,000 and as a result, the government subsidies the cost of running these utilities.
The new system will also eventually impose a new water fees to cover the loan.
Bowen noted that Palau has the highest rate of water usage in the Pacific while the fees are relatively low.
Vice President and Finance Minister Kerai Mariur said that currently not all households are metered and that the rate collected is $0.80 cents per thousand gallons in most areas and a flat rate of $5 in Airai State.
Bowen said this way the government will not be shouldering 80 percent of the cost to maintain the system.
Mariur said this will be one of the sources of revenue for the country.
The planned loan however will have to be approved by members of the Olbiil Era Kelulau.
Bowen meanwhile said the loan will be up for discussion before the ADB board in November.
“The government can then spend on other infrastructure if this cost-effective project will be implemented,” Bowen told reporters.
Bowen which oversees at least 11 countries was in Palau for a one-week visit and met government officials and individuals from the private sector to have a better understanding of the key issues.
ADB has been providing help in Palau and over the past five years assistance in excess of $3.3 million has been granted.
