WB $500 mn for non-JNNURM city


World Bank may lend $500 mn for non-JNNURM city utilities
11 Apr 2009, 0052 hrs IST, Rajat Guha, ET Bureau
NEW DELHI: The government plans to raise $500 million from the World Bank to finance urban facilities in 15 small cities that are not covered

under the Rs 50,000-crore Jawaharlal Nehru National Urban Renewal Mission (JNNURM).

The funds will be used to finance facilities such as public transport, water management and sanitation projects.

“The government is talking to the World Bank for a loan. The loan will, in turn, be advanced to city development authorities after appraising their detailed project reports for infrastructure development,” said an urban development ministry official, requesting anonymity.

Long-term loans advanced by multilateral financial institutions such as the World Bank and the Asian Development Bank (ADB) are usually given at a low rates of interest. The ministry would examine the total transaction cost involved and then extend loans to state governments.

All states have been asked to set up dedicated authorities to focus on infrastructure needs in cities. The government encourages private participation in these projects, which can avail funding on the basis of their credit rating.

Apart from facilitating fund disbursal to states, eligible urban local bodies (ULB) will soon be permitted to access credit directly from multilateral lending agencies such as World Bank and ADB, as opposed to the current practice of funds being routed through the central government.

The ULBs will then be able to seek funding from multilateral lending agencies as the government has already launched an initiative to rate their infrastructure projects.

The urban development ministry is of the view that central allocation of Rs 50,000 crore through JNNURM alone would not be sufficient to meet the requirements of local bodies.

As per the estimates prepared under JNNURM, urban infrastructure investment requirement is Rs 3,35,000 crore for the 63 mission cities alone. Of this, an investment of Rs 57,000 crore is envisaged by 43 cities in the sectors of water supply, sewerage and drainage.


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Filed under Infrastructure finance, Jawaharlal Nehru National Urban Renewal Mission, JNNURM, Privatisation of Municipal Services, Urban Infrastructure Finance, Urban reforms Agenda

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