Taking a lead in raising funds via municipal bonds, the Pune Municipal Corporation’s (PMC’s) Standing Committee on Tuesday approved the issuing of municipal bonds by the civic administration. These have been introduced to raise Rs 2,264 crore for the implementation of an ambitious project — equitable water supply across the city.
“The estimated cost of the project is Rs 3,513 crore… the civic body can’t spend such a large amount from the revenue collected by it. So, it decided to raise Rs 2,463 crore from outside sources… Rs 1,050 crore would be funds from the central government’s scheme of AMRUT and Smart City Mission, along with the PMC’s share. Municipal bonds were the best available option to raise funds from the open market, for which the committee has given its consent,” said Municipal Commissioner Kunal Kumar.
He said the PMC is going to raise funds from municipal bonds at an interest rate of 8 per cent, but the rebate of 2 per cent by the Union government would enable the civic body to raise funds at an interest rate of 6 per cent. “The PMC has the best credit ratings in the country and many are interested in investing in municipal bonds, to be issued by the civic body, due to assured returns,” said Kumar.
According to the proposal, the civic administration said it would raise funds for the next five years as per the requirement of the project, and start paying on the bonds after the completion of the project.
“The PMC has already decided to hike water charges by 15 per cent per annum, for the next five years, and 5 per cent till 2047. The revenue collected would help the civic body get free of debt repayment by 2032, and after that, it would be able to generate revenue for the implementation of future projects,” he added.
It was after a gap of 10 years that a municipal corporation was raising funds through municipal bonds, said Kumar, adding that the PMC would also explore the possibility of raising money from international markets.
Committee chairperson Murlidhar Mohol said while the Shiv Sena member opposed the proposal, members of all other parties had approved it. “The raising of funds through municipal bonds was necessary for the implementation of water supply project,” he said.