The Keetmanshoop municipality is losing one third of its annual water consumption because of water leaks.
An EU project together with the local authority aims to fix this by repairing the town's pipe network.
"The European Union is proud to be partner in this process. But there is still lot of work to be done and we should avoid complacency," the EU ambassador to Namibia, Raul Fuentes Milani, said at the launch of the N$3,5 million project at Keetmanshoop yesterday.
Milani said he considered the Keetmanshoop water project an important one which can be replicated nationwide if successful.
The council secured N$2,6 from the European Development Fund through its Finnish partners, the Kangasala Municipality of Finland, to implement the the water project over a period of three years in collaboration with Tampere University of Technology in Finland and the Polytechnic of Namibia.
The council is contributing N$900 000 from its coffers.
Keetmans town councillor Finna Elago said the water project brings renewed hope to the town.
Elago said infrastructure development tops the council's priorities.
Keetmanshoop is not the only town with an ageing water infrastructure. A number of local authorities across the country have blamed leaking underground pipes for their skyrocketing water bills.
Rehoboth, whose water was cut this week, is one of the towns blaming their high debt to NamWater on underground water leaks.
Despite having identified the problem many local authorities do not have the money to replace their pipelines and must pay for water their residents have not consumed.