A controversial water supply project that sent former Nepalese prime minister Sher Bahadur Deuba behind bars is now being accused of promoting Japanese multinationals at the cost of Nepalese firms.

The Water and Energy Users' Federation, Nepal (WAFED), a Kathmandu-based NGO, wants the $464 million Melamchi water supply project - funded mainly by the Asian Development Bank (ADB) and the Japan Bank for International Cooperation, the Japan government and three more foreign donors - to be stopped.

The group is accusing the ADB and Japan of vested interests and turning a blind eye to the "lack of feasibility" of the project. "The project cost is escalating due to delays," says Gopal Siwakoti, one of the leaders of WAFED.

"Earlier scheduled to be completed by 2006, it will now go beyond 2010. Meanwhile, the cost has gone up to $531 million."

The donors expect to recoup the full cost from the residents of Kathmandu valley, who would be benefited from the project. With 30-40 percent of the valley's population living in slums and barely eking out a living, this is a pipedream, says Siwakoti.

According to WAFED, Kathmandu valley has adequate water resources. Only, they need to be managed more efficiently and the existing infrastructure needs to be strengthened.

It also says earlier the project included setting up a 14 MW hydropower project that would have helped minimise the costs. But it was dropped at the ADB's insistence, it says.

In two weeks' time, WAFED says it is going to lodge a complaint with the anti-corruption wing of ADB in Manila, asking them to investigate the rising costs and the feasibility.

It said it has already started campaigning in Britain and other European countries, asking MNCs not to take part in the tender floated by the project authorities to hand over the water supply management.

The Melamchi project hit the headlines in February, after King Gyanendra formed the Royal Commission for Corruption Control to probe allegations of corruption against the deposed Deuba government.

Deuba, a former minister and several top bureaucrats have been charged with irregularities while awarding a contract in the Melamchi project. The allegations caused ADB to conduct its own independent investigation and its findings, tabled last week, clear Deuba and his aides of any irregularities.

Neither the commission nor WAFED accepts the ADB report.

WAFED, however, distanced itself from the commission. "It is an unconstitutional body formed arbitrarily by the king after the royal coup," Siwakoti says. "We are a non-political organisation trying to address environmental as well as social concerns."