The Government of Nepal with the financial assistance of Asian Development Bank implemented Small Towns Water Supply and Sanitation Sector Project during the period 2001- 2008. The objectives of the project was to improve health and quality of life of the people living in the project towns by constructing or extending water supply, drainage and sanitation facilities and providing health 50 towns in the country. The Minis and hygiene education program in about 40 try of Physical Planning and Works (MPPW) was the Executing Agency and Department of Water Supply and Sewerage (DWSS) was the implementing Agency of the project. The total project cost was at US $ 53.2 million. The water users shared 20% of construction cost, including 5% up-front cash during the project implementation period and 30% was provided to the Water Consumers Association (WCA) on loan basis through Town Development Fund (TDF).

The Project was finally implemented in 29 towns through Town Development Fund (TDF), where inadequate water supply and sanitation had adversely affected the health and quality of life of the residents. About 0.6 million people, of whom more than 34 percent lived below the official poverty line, benefited from the Project. The Project involved the towns of Terai as well as of hills. Both surface piped water system with the construction of intake, bulk distribution lines, water reservoirs, treatment plants etc. (e.g. in Lekhnath municipality) and deep boring with the construction of overhead water tank of 100,000 to 450, 000 liters capacity (e.g. in Kakadbhitta, Itahari, Parsha and Ratnagar, Lamahi, Atariya, Mahendranager towns/municipalities etc.) were constructed. Different size of GI Pipe (from 15 mm to 100 mm), HDPE Pipe (from 20 mm to 180 mm and Ductile Iron Pipe (size form 150 mm to 200 mm) with a pipe length ranging from 14 km to 40 km depending upon the requirement in a particular town were use.