The rapid and consistent growth of the urban population in Kathmandu Valley has led to a corresponding increase in the demand for infrastructure and social services. This growing demand has only been partially met by the Government of Nepal. As a result, the Valley is faced with a chronic shortage of water supply and inadequate access to basic urban sanitation services. This situation poses serious health risks for the urban population as well as wider environmental concerns.

In response, the Government of Nepal undertook two pronged approach to improve water supply services in the valley with support from various external development partners:

• infrastructure development to augment the water supply by implementing Melamchi Water Supply Project(MWSP) and
• institutional reforms, which included the separation of asset ownership and management of water utility operations; the establishment of a regulatory commission for water tariffs; and the establishment of an independent water services operator.In effect, these three entities take over the roles and responsibilities that used to be vested in the Nepal Water Supply Corporation (NWSC) for the Kathmandu Valley.