The ABD's headquarters in the Philippines, in an email message to the Nepalese finance ministry, said it would no longer fund the multi-million-dollar Melamchi Drinking Water project, the influential Nepali language Kantipur daily said.
The completion of the project would have provided much needed drinking water to the water-starved Kathmandu Valley.
The case was followed closely in the Nepalese capital Kathmandu as it would set a precedent in which Maoist influence might be measured in such sensitive issues as privatization of public utilities.
The difference surfaced between Maoist minister for local development Hishila Yemi and the ADB over the awarding of a contract to distribute drinking water in the Kathmandu Valley.
Yemi, who has publicly expressed reservations over handing over the management to a private foreign firm, said she would reconsider the earlier government decision to award the contract to a British firm, Severn Trents Plc.
Under the ADB terms, the contract should have been awarded on Monday.
The newspaper quoted the minister as saying she remained unmoved by the latest ADB pullout and that the country faced far more pressing challenges than constructing a drinking water system.
The ADB is a major partner in the 450-million-dollar project. In 2005, two other major donors, Norway and Denmark, pulled out citing various reasons including delays in construction and insecurity.
The ADB had assured the Nepalese government to fund 140 million dollars and the pullout means the project could be shelved.
The Melamchi Drinking Water Project, situated just east of the Nepalese capital, was set up to provide 170 million liters of water to the three cities in the Kathmandu Valley.
The Nepalese capital currently requires about 240 million liters of drinking water but the supply falls far short of the demand - just 90 million liters of water a day. dpa kr jh
- Deutsche Presse Agentur
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