The grant, which was approved by ADB's Board of Directors, will directly benefit about 100,000 people in six towns of Omnogovi and Dornogovi provinces, where poverty incidence is around 31%.

Both provinces are poised for rapid economic growth due to active mining and cross-border trade. As a result, population in urban towns is projected to more than double by 2020.

The provision of urban infrastructure and services is currently poor and is not keeping pace with population growth. Many basic services are either inadequate or absent. Insufficient and unreliable urban services add to business and household costs, damage the urban environment, and diminish quality of life.

'Maximizing the benefits for the residents of Southeast Gobi will depend on effective urban planning, management, and service delivery policies and structures being in place,' said Shane Rosenthal, Senior Portfolio Management Specialist of ADB's Mongolia Resident Mission.

The project has two parts. The first part will fund consultations to make way for infrastructure services reforms, institutional development, and capacity building to strengthen urban planning and policy making, regional cooperation, and project management and project performance monitoring.

The second part will fund needed infrastructure improvements such as developing water sources, transmission, storage, and distribution facilities, increasing connections to piped water supply and reducing system leakages. Funding will also be provided to increase wastewater collection, boost wastewater treatment capacity, and enhance other sanitation services.

The total cost of the project is $21.9 million, with the Government of Mongolia providing $6.8 million and local governments contributing $100,000 to complete funding.