| | BACKGROUND:
There were eight Urban Local Bodies (ULBs) around Bangalore, namely, Byatarayanapura, Bommanahalli, Dasarahalli, Kengeri, K.R.Puram, Mahadevapura, Rajarajeshwarinagara and Yelahanka, which have now been merged under the Bruhat Bangalore Mahanagara Paalike (BBMP). Each of these have been on the fast track to growth and development, thanks to thousands of employees of various multinationals acquiring homes for their families here.
While the 2001 census estimated the population in these areas to be 12 lakhs, studies showed that these areas lacked even the basic infrastructural services such as a piped water system and an underground drainage system. Projections showed that by 2020, the population in these eight erstwhile ULBs would touch the 30 lakh mark, which is an increase of 18 lakhs in just two decades.
INTRODUCTION TO GBWASP:
The Greater Bangalore Water and Sanitation Project (GBWASP), Implemented by the Bangalore Water Supply and Sewerage Board (BWSSB), has two components; a Water Supply component and an Underground Drainage (UGD) component.
The Water supply component has a very creative structure for financing. The USAID has had an important role in the design of the structure. The UGD component has been funded by the World Bank under the Karnataka Municipal Reforms Project.
There are some features that make the design of the water supply component unique.
Beneficiary Capital Contribution (BCC): This is the first time that such contributions have been raised in the state for a water supply project.
Market Borrowings: It is the first attempt in Karnataka to access market borrowings through the issue of Tax Free Municipal Bonds on behalf of the ULBs.
FINANCING PATTERN FOR THE WATER SUPPLY COMPONENT:
A creative model for financing the water supply component has been adopted with assistance from USAID’s Financial Institutions Reform and Expansion of FIRE (D) project.
The total cost of water supply component of the project has been estimated to be Rs.447.06 crores after an upward revision in cost due to addition of more area after commencement of implementation of the project. The sourcing has been through:
BENEFICIARY CAPITAL CONTRIBUTION:
The BCC scheme involves financial contribution for seeking water connection. This approach makes all the citizens and business houses, stakeholders in the project and helps meet the cost of investments upfront. Contributions collected beyond the estimated Rs.119.45 crores are used to repay the loans raised for the project, thereby reducing the interest burden on the project.
A structure for collection of contributions has been arrived at after elaborate public consultations. In this process, concern for the urban poor has been addressed and owners of residential sites and apartments of area less than 600 square feet have been recognized as ‘urban poor’ and have been exempted from payment of contributions. The urban poor are not required to produce any certification of income. Bigger properties are required to make contributions on a graded basis depending on their size and utilization. The structure drawn is as below:
| Description of properties seeking connection | Upto 600 sft. | Bet.600 to 1200 sft. | Bet.1200 to 2400 sft. | Above 2400 sft. |
| Residential Sites/Apts. | Nil | Rs.5,000 | Rs.10,000 | Rs.15,000 |
Non- residential/
Educational Instns/
Hospitals, etc. | Rs.5,000 | Rs.10,000 | Rs.15,000 | Rs.8 per sft. |
Commercial Establishments/
Shops. | Rs.5,000 | Rs.10,000 | Rs.20,000 | Rs.8 per sft. |
| Software/Hard ware Cos. | Rs.7,500 | Rs.15,000 | Rs.25,000 | Rs.5 per sft. |
| Hotels/Restaurants. | Rs.7,500 | Rs.15,000 | Rs.30,000 | Rs.15per sft. |
MARKET BORROWINGS:
100 crore rupees have been raised through Tax Free Municipal Bonds. The eight ULBs have raised this amount jointly through a Pooled Finance Framework. The Bonds have been floated by the Karnataka Water and Sanitation Pooled Fund (KWSPF), a Trust set up for this purpose by the Government of Karnataka. The KUIDFC has been appointed the Fund Manager. These Bonds have been raised on a coupon rate of 5.95% (Annual) for tenure of 15 years including moratorium of 3 years.
The bonds have been rated LAA (SO) by ICRA after the institution of the following four tier comfort mechanism for credit enhancement:
Escrow of 40% of the revenue surplus of the ULBs to a separate water project account meant for repayment of Bond obligations.
A Bond Service Fund (BSF) to be maintained at Rs.25.50 crores to meet the Bond obligations in case of shortage in revenues of ULBs. ULBs are required to replenish such temporary draw-downs.
A guarantee towards 50% of the principal from USAID, through its Development Credit Authority (DCA) programme, for replenishment of drawal from the BSF.
A comfort letter from the Government of Karnataka for interception of SFC devolution to the ULBs at source. This would make good any drawal from the DCA guarantee.
The comfort mechanism drawn ensures full subscriptions to the Bond issue. Tax free status granted to the Bonds by the Government of India (GoI) further facilitates subscriptions. Commercial banks are the main subscribers. The concept and design for the Bond issue has been drawn by USAID’s FIRE (D) project. This is a pilot attempt to pave the way for helping ULBs to access the capital markets for meeting their needs on a long term basis, as is in vogue in a country like the USA. The Bonds have also been listed on the Bombay Stock Exchange and can be traded. This approach also helps in imposing better financial discipline in the management of the ULBs.
GOVERNMENT GRANTS:
The Government of Karnataka provides for grants of 23.33% of the project cost for water supply projects undertaken by ULBs with a population of over 75,000. In case of ULBs with a population of less than 75,000, the policy allows grants of 50% of the project cost.
The Government has estimated the grant amount to be Rs.74.28 crores and has already disbursed this amount for use in the project cost and the revised amount has been estimated to be Rs.108.98 crore.
MEGA CITY LOAN:
The Government of India sponsored Mega City Scheme has extended a loan of Rs.153.33 crore through KUIDFC, the nodal agency for the Mega City Scheme.
IMPLEMENTATION OF WATER SUPPLY COMPONENT:
The GBWASP is being actively implemented and the water supply component is expected to be completed by the end of 2008. It is being implemented by the Bangalore Water Supply and Sewerage Board (BWSSB) in two phases.
The underGROUND drainage component:
The cost for the UGD component of the Project has been estimated to be Rs.567.96 crores. It includes the cost of road restoration at Rs.127.72 crores, after laying of pipes. This component has been funded by the World Bank and is also being dovetailed with the centrally sponsored JNNURM scheme to obtain 35% of the cost as grants from GoI. It is being integrated with the water supply component and the JBIC – assisted project for bulk water augmentation and sewerage treatment facilities, after which it will provide a comprehensive solution to the waste and sanitation needs of the city.
For Accessing the Feedback Form Please Click here... |
|
 |
 |