The peri-urban areas in the Valley settled around the 16th century holding historical significance are mostly inhabited by poor families and are still deprived of the basic requirements of safe drinking water and adequate sanitation. These settlements either have their own small water supply schemes or are served by the city water supply network. However, water from these and other traditional water sources is microbiologically unsafe due to high level of contamination and lack of treatment facilities.

Lack of adequate sanitation systems is a major reason for poor health conditions. Sanitation coverage is very low and where available the facilities used are pit latrines, pour flush latrines with septic tanks, connected to sewer lines or storm water drains. Majority of the population still practice open defecation. In areas with high groundwater table, pit latrines are quickly filled which are either emptied manually in the absence of a proper faecal sludge management system or are abandoned. Most of the sewer lines originally designed for storm water drainage do not have proper outlet and are directly discharged into open fields or into rivers. The water and sanitation situation is similar in other peri-urban and emerging settlements throughout the country.

In this context, government of Nepal has proposed four peri-urban settlements viz. Khokana, Bungmati, Siddhipur and Lubhu and three municipality’s viz. Thimi, Banepa and Dhulikhel within and outside of the Valley for this programme. The main objective of the programme is to improve water and sanitation facilities in the selected areas with enhanced institutional and human resources capacities. Local private sectors will be strengthened for service delivery and to enhance local economic development. Furthermore, this component will act as a complementary initiative for other ADB funded water and sanitation programmes like Kathmandu Valley Water Reforms Programme (KVWRP) and Urban and Environmental Improvement Project (UEIP). The key areas of interest for the programme are:

1. Water Demand Management through Capacity Building

The programme focuses on achieving water demand and quality management by establishing water and sanitation users' committee. This committee will be given the responsibility of providing safe drinking water and proper operation and maintenance of the supply scheme. In addition, it will also be responsible for collecting water tariff to create an O&M fund. The programme will also target to strengthen the local authority for good governance practice. After creation of this committee, the programme will implement major infrastructure development and improvement activities on water supply schemes. To increase the water resources water bodies like ponds and dug wells will be restored. Similarly, rain water harvesting will be promoted for ground water recharge and household consumption. Large scale awareness raising through values-based water education at school and communities will act as a tool for sustainable water management.

2. Environmental Sanitation Improvement

Priority will be given to appropriate technologies on on-site sanitation system. Since most of the peri urban settlements are farming communities, sanitation improvement concept will be based upon nutrient recycling where human excreta and solid waste will be used as a fertiliser with necessary treatment. For this, ecological sanitation will be promoted. Similarly, faecal sludge management system will be established with resources recovery principle. Decentralised low cost sewer management system will be adopted by using treatment system like Reed Bed technology. Household and small scale composting system will be promoted for management of household organic waste.

3. Income Generation through Improved Water and Sanitation

Local entrepreneurs will be established from poor and marginalised communities for providing sanitation services like faecal sludge management, public toilet operation, compost marketing, etc. for their livelihood improvement through income generation. Likewise, local entrepreneurship training will be provided to water and sanitation users' committee to provide opportunities to benefit from water supply and sanitation services.