To fund treated water supply project, Gzb corp to float 150 crore municipal bonds

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Published on Jan 06, 2020 07:36 PM IST
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Ghaziabad: The Ghaziabad municipal corporation is preparing a 237 crore project to supply treated water through piped systems to Sahibabad industrial area.

Officials said they have engaged CRISIL, a credit rating agency, for the purpose of assessing the corporation’s financial health which will allow it to float municipal bonds to the tune of 150 crore to help fund the project.

Municipal bonds are a debt instrument issued by a civic body to finance capital expenditure while investors get payments on a predetermined rate of interest over a period of time.

CRISIL has been engaged as per the guidelines of the Securities and Exchange Board of India (SEBI). The corporation had earlier got its credit rating assessed by two other agencies but the SEBI guidelines has forced the corporation to get it assessed again.

“During the two previous occasions, the corporation had a minimum credit rating of ‘AA’ which is required for floating municipal bonds. Now, on the directions of SEBI, we have engaged CRISIL and it will submit a report on the civic body’s financial health within 15 days. Once we receive the report, the process for floating bonds will be initiated. The funds collected will help us fund the project to supply piped treated water to Sahibabad industrial area,” Arun Kumar Mishra, corporation’s accounts officer, said.

Under the project to supply piped treated water, the corporation has planned to lay down pipelines from its 48 MLD capacity sewage treatment plant (STP) in Indirapuram to the Sahibabad industrial area which is about 4km away.

“The piped supply will be given to industrial units for their use and charges will be levied. The entire project is pegged at a cost of 237 crore and 150 crore will be raised through municipal bonds. The rest of the funds will be borne by the corporation from its own resources. The project will be helpful in saving groundwater,” Mishra said.

According to the initial project report, the STP in Indirapuram has a net output of 40 MLD. The project is estimated to generate a net return of 325.43 crore after 15 years of commissioning.

Last July, the Uttar Pradesh cabinet had approved a proposal for floating of bonds by municipal corporations of Lucknow and Ghaziabad in order to fund infrastructure projects. The Lucknow corporation is to float 200 crore worth of bonds while the Ghaziabad corporation was slotted to float bonds to the tune of 150 crore.

The cabinet decision had stated that an agency with a rating below ‘AA’ cannot approach the market for generation of funds and SEBI guidelines will need to be adhered to in the entire process.

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  • ABOUT THE AUTHOR

    Peeyush Khandelwal writes on a range of issues in western Uttar Pradesh – from crime, to development authorities and from infrastructure to transport. Based in Ghaziabad, he has been a journalist for almost a decade.

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