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This story is from November 16, 2006
NMC to float bonds for water works
The Nagpur Municipal Corporation (NMC) plans to issue seven-year tax free bonds to raise Rs 128 crore to beef up its water works.
The civic body has sought the Union urban development ministry's permission to implement the scheme. The corporation is also holding talks with World Bank representatives for a Rs 180 crore loan for various infrastructure projects.
"We have sought the Centre's approval for floating bonds.
"One advantage is that we will be able to borrow funds at lower rates. Last year, we borrowed Rs 50 crore from a bank at 7.25 % interest per annum, but this time the banks have hiked the rates,"he said. The bonds will help the NMC get cheaper funds.
The civic body mopped up a budget surplus of Rs 90 crore this year and Chandra hopes he can borrow Rs 500 crore or more from the market to finance a number of projects.
"We are seeking low interest long-term loans. The World Bank has shown interest in our projects and we held discussions with bank officials last week. We would like technical and financial assistance from them,"the municipal commissioner said. "The Manila-based Asian Development Bank too has approached us for funding,"he added.
So far, the Centre has sanctioned projects worth Rs 350 crore under the NURM. These include works to enhance water distribution in the city, water audit and energy audit for water supply, leakage detection programme and laying of 27 km of water pipes under the Pench IV project.
The total cost of water reform projects is about Rs 600 crore and the NMC will have to bear one-third of the cost. Transmission and distribution losses are as high as 60 % and NMC barely recovers half the amount it spends on supplying water. "With these reforms, we will be able to bring efficiency and cut losses,"Chandra added.
The NMC is also vying for better credit rating. "Four months back, CRISIL gave us a rating of A+. We have asked them to review the rating. Our financial position has improved after we approved the development of six malls. The NMC will earn Rs 545 crore from this, over a period of 20 years,"said Chandra said.
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