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Since embarking on a modernization process in 1961, Bhutan has faced increasing urban migration due to limited opportunities in the rural areas. If trends continue, close to half of the country’s population may reside in the urban centers by 2020, increasing the pressure on already strained urban infrastructure and services. Bhutan’s urban facilities and basic services would therefore need upgrading and expansion particularly in its two largest cities of Thimphu and Phuentsholing and the regional center of Dagana.

Responding to government request, the Asian Development Bank (ADB) approved in September 2006 a $24.6 million loan for the Urban Infrastructure Development Project. The project was designed to contribute in enhancing living standards and sustaining economic growth by improving urban infrastructure and services in Thimphu, Phuentsholing, and Dagana. It also aimed to pilot the land pooling process in managing urban development in Thimphu.

Overall, the project targeted the provision of 28.5 kilometers (km) of urban roads, 2 water treatment plants (WTPs) with 27 km of mains, increased sewerage coverage, construction and upgrading of wastewater treatment plants (WWTPs), improved solid waste management (SWM), and increased operational and management capacity of the Thimphu City Corporation (TCC), the Phuentsholing City Corporation (PCC), and the Dagana dzongkhag (district).

In Thimphu, a new water supply system, with a large WTP capacity, was constructed; an existing WTP was upgraded; SWM was improved; and vital infrastructure, including secondary and tertiary roads, water distribution systems, sewer collection network, and ducting for power and telecommunications network were completed in 4 of the 10 local areas being developed by TCC in the southern area.

The urban infrastructure targets in Thimphu were exceeded. Infrastructure in areas under land pooling constituted 42% of the base cost at appraisal and 55% at completion. While the target was for 11,000 persons or 1,800 households to start house construction in southern Thimphu, by 2017, 18,979 persons were already residing in areas under land pooling. Although the targets were linked to infrastructure, the major achievement was on piloting land pooling, without which none of the urban infrastructure would have been developed.

In Phuentsholing, the project improved the road network, road junctions, and road safety. Some civic amenities were also established. All output targets were overachieved.

In Dagana, the project increased the quantity, quality, and coverage of water supply, with metered connections provided to households; upgraded the drainage and installed gabion walls to stabilize the slopes along the main roads; and improved sanitation.

Successful delivery of most outputs, in many cases exceeding targets, led to the substantial attainment of the project outcomes, with palpable impacts in improving the living conditions in each project area. Most importantly, land pooling transformed southern Thimphu into a well-planned urban area, successfully demonstrating the effectiveness of the technique in managing urban development.

ADB’s South Asia Department rated the project successful. The Department of Urban Development and Engineering Services (DUDES) under the Ministry of Human Works and Settlement was the executing agency. DUDES, TCC, PCC, and Dagana dzongkhag were the implementing agencies.

Project Information
Project Name: 
BHUTAN: Urban Infrastructure Development Project
Report Date: 
September, 2017
Main Sector: 
Project Number: 
Report Rating: 

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