Greater Warangal to raise funds like GHMC

Greater Warangal to raise funds like GHMC

The urban local bodies (ULBs) have, of late found, new ways of raising funds for developing city infrastructure; one of them is municipal bonds, a...

Warangal: The urban local bodies (ULBs) have, of late found, new ways of raising funds for developing city infrastructure; one of them is municipal bonds, a trend borrowed from the western countries. Catching up with the trend, Hyderabad and Pune have already mobilised funds required for the infrastructural development in their areas.

Now, it seems to be the turn of Greater Warangal Municipal Corporation (GWMC). Its main aim is to provide uninterrupted water supply in the city. In an effort to bridge the funding gap, the GWMC is exploring the possibility of raising funds through municipal bonds for the city development.

It may be noted here that Greater Hyderabad Municipal Corporation (GHMC) in February 2018 and Pune Municipal Corporation in June 2017 have received an overwhelming response when they issued municipal bonds. Both the local bodies have comfortably raised Rs 200 crore each through issue of municipal bonds. It may be mentioned here that municipal bonds are debt instruments. The investor is repaid the fixed amount of principal with interest over a period decided by the municipal body.

Although Warangal is also selected under the Smart City Mission, and Atal Mission for Rejuvenation and Urban Transformation (AMRUT), it cannot rely solely on its revenue sources to bridge the funding gap.
The plan is to address the fund gap for the ongoing work on providing drinking water to all the households in the city already taken up under AMRUT scheme with an estimated cost of Rs 560 crore.

Against this backdrop, the ULB which is already executing the AMRUT scheme has a credit rating of A- which is not all that bad compared to others. A better credit rating indicates the stableness of the bond. The GHMC bonds has been rated AA, thus indicating its worthiness.

Speaking to The Hans India, Municipal Commissioner VP Gautham said: “The aim behind going for mobilising of Rs 50 crore is to ensure 24X7 drinking water supply in the Corporation limits. We are in consultation with the rating agency on how to improve the rating.”

The rating process will take about four weeks. Meanwhile, we will get the assent of the Council, which is already aware of the initiative. After the resolution is passed in the Council, we will send it to the State Government for its approval. Then we will float the bonds using the Bombay Stock Exchange’s bond platform, he said, referring to the two-month timeframe for entire process. The transaction advisor for the GWMC is SPA Capital Advisors Limited.

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