Telangana sets up firm to enable municipalities raise funds

Hyderabad: In a significant move to enable municipal corporations and municipalities access capital market indirectly and raise funds for development of roads, flyovers, skyways and other urban infrastructure facilities, the TS government has set up a new company “TS Urban Infrastructure Financial Services Ltd” (TSUIFSL).

The company will issue bonds to raise funds from the capital market and extend loans to urban local bodies for a tenure of 7, 12 and 20 years.

The government has appointed SBI Capital Market Ltd as transaction adviser and as an Associate in the proposed venture as Assessment and Appraisal agency without any business interest in the company. Since all local bodies in the state are financially weak, they cannot access capital market directly and TSUIFSL will come to their rescue.

The TS government has lined up infrastructure projects worth Rs 80,000 crore in three years in Hyderabad alone, besides development of Warangal, Khammam and Nizamabad municipal corporations. Mobilisation of such huge funds within a short period has become a tough task for the government, thus delaying execution of projects.

The orders issued by special chief secretary, municipal administration, M.G. Gopal said: “The ULBs are weak in terms of their own financial strength which is a major cause for the lack of adequate investments for capital formation and maintenance at their level.

The Centre and state government support in the form of plan and non-plan grants has some limitation to complement the finances of ULBs. Some ULBs like GHMC have already taken necessary steps and directly accessed funds both from open market by floating bonds as well as from lending agencies such as the World Bank, Hudco and ADB. The option of raising institutional loans or issuing of bonds is not available to all ULBs in terms of their financial strength.”