The project includes three components, the first of which is to increase water flow from the new treatment plant in Huachipa, located in Lima's northeastern area.
The loan will support institutional strengthening and the assessment of service demand to help reduce commercial and physical losses, according to a bank release. The project also contains a communicational component so that users adopt best practices for using the water service.
The financing consists of an 18-year variable margin loan with a 17-year grace period.
"This loan will help us solve issues created by bursting pipes and water losses, which are due to the age of northern Lima's piping system," said Sedapal general manager Jorge Barco Martínez.
Some 158,000 residents in northern Lima are expected to benefit from the initiative.
Close to 1mn Lima residents lack access to running water at home, due mainly to the rapid growth of the capital's population and the scarcity of water resources in the coastal area.