Started in 21 December 2000, Melamchi Water Supply Project (MWSP) is an Asian Development Bank assisted project which aims to improve the overall scenario of the water and wastewater utility of the Kathmandu Valley. MWSP covers a part of Indrawati and Bagmati watershed and includes areas of five districts. The key water diversion facilities are located within Sindhupalchowk and Kavrepalanchowk districts, whereas, water treatment plant, water distribution and the ancillary structures, are located within Kathmandu valley. 

Later in 2008, MWSP was split into two distinct Subprojects; (i) the Melamchi River Water Diversion Subproject (Subproject -1) covering all project activities in Melamchi Valley including constructions of Water Diversion Tunnel (WDT) and Water Treatment Plant (WTP) and (ii) Kathmandu Valley Water Supply and Sanitation Subproject (Subproject -2): Kathmandu Valley Water Supply and Sanitation Project.

Project Implementation Directorate, under the Kathmandu Upatyaka Khanepani Limited Board of Directors, is the implementing agency of the Subproject- 2 under the present loan from ADB (No. 1820) which comprises of: