WB warns Nepal could lose funds from donors for changing grant distribution modality to quake-affected households

The World Bank (WB) has raised a serious concern over the Nepalese government's plan to distribute housing grant to the earthquake affected people in two installments instead of current arrangement of three installments.

The WB, which leads Multi Donors Trust Fund (MDTF), administering over 500 million U.S. dollar fund to support the housing grant for the earthquake affected households, wrote a letter to Nepalese Finance Minister Bishnu Poudel on Thursday reminding him about the principles under which which donors agreed to provide assistance while warning against breaching those principles.

The Nepalese government has announced providing 1846 U.S. dollar (Nepalese rupee 200,000) for each household affected by last year's deadly earthquake. As per the agreement reached with the donors, grant will be distributed in three installments based on the four principles of equity, safer construction, ownership and transparency.

However, on Wednesday, Nepalese Prime Minister KP Sharma Oli told the Parliament that the government would discuss with the WB-managed fund to alter the current arrangement in favour of providing two installments.

But, in a letter to Finance Minister WB Country Manager for Nepal Takuya Kamata has reminded that the principles of grant distribution under which grant should be disbursed in three installments first as fast tranche release upon certification of eligibility while the subsequent two disbursements will be made upon achievement of defined milestones in reconstructing houses.

"These are the modalities through which the World Bank is authorized to provide financial support to the program." "Each payment will be subject to certification by competent technical personnel in order to ensure that the grants are used to build houses according to safer standards using local materials and enhanced traditional construction techniques," reads a letter obtained by Xinhua.

A senior World Bank official told Xinhua that the use of word authorized' in the letter means the WB is not authorized to provide funds going against the agreed principles.

"The WB is concerned that converting the three phases of payments into two could result in breach of the principle of building back better as people would seek to build houses without following parameters of making houses earthquake resistant," WB official said.

The multilateral donors has also reminded that other development partners involved in the rural housing reconstruction programJapan International Cooperation Agency (Jica),US aid agency (USAID), Switzerland and Canada also follow the same principles and modalities in their respective support.

With WB showing concerns over the government's new plan, the Nepalese government has also planned to hold talks with the donors regarding the issue. "As the donors are important stakeholders in reconstruction process, we will take final decision after consulting with donors," said Dr. Govinda Nepal, chief economic advisor at the Finance Ministry. Endit