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Saturday, Dec 01, 2007
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Coimbatore weighs funding options for schemes

K.V. Prasad

Credit rating report expected in a month, says Corporation Commissioner
To explore option of floating bonds to raise funds

COIMBATORE: The Coimbatore Corporation is awaiting a report on its creditworthiness, set as it is to implement a number of infrastructure development schemes for the city under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM).

Credit Rating and Information Services India Limited (Crisil), a national level rating agency, is in the process of assessing its funding schemes and repayment potential.

While going for loans is decidedly an option, the civic body may also explore the possibility of floating infrastructure bonds. But the bond option is subject to Crisil’s grading.

The credit rating exercise is essential, as the corporations of 63 cities chosen for schemes under the JNNURM are expected to meet 30 per cent of the cost of projects on their own.

Grant

Schemes worth Rs. 3,186 crore have been drawn up for Coimbatore city, and 30 per cent of the amount has to be met by the Corporation. Central Government grants will cover as much as 50 per cent.

While the JNNURM envisages a 20 per cent grant from the State Government, it is being made available to the Coimbatore Corporation as an interest-free loan. This puts the burden of funding to an extent of 50 per cent on the Corporation.

As for its own contribution of 30 per cent, the resource mobilisation mode has been left to the civic body. It can raise loans provided it is found credit-worthy.

Report

“We expect the credit rating report to be submitted in a month,” says Corporation Commissioner P. Muthuveeran, in response to a question on whether the civic body will go in for bonds.

“Bonds can certainly be an option. But a suggestion for this will be made by the agency on the basis of its findings,” he says.

The Commissioner’s response implies that it will depend on the Corporation’s credit-worthiness.

The Corporation had contemplated floating bonds for the underground drainage scheme a few years ago, but did not pursue it.

The local body is now set to take a fresh look at this option in the wake of Local Administration Minister M.K. Stalin announcing a month ago that the Salem Corporation and some other municipalities in the State have the option of floating bonds to raise funds for infrastructure development schemes.

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