The funds will be used to build a wastewater collection and treatment system in Panamá Oeste province.
About 8,600 residents will benefit from the initiative.
A local mayor filed a constitutional challenge against a reform that puts the management and provision of water services in the hands of the state government.
The state's legislative committee on water is asking for proposals from municipal operators.
The Honduran government spent over US$3mn to carry out waterworks and road infrastructure projects in the city of Comayagüela.
The water and sanitation services regulator initiated a sanctioning procedure against the utility after an unannounced suspension of service that affected 90% of people living in the town of Chañaral.