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Construction : Interaction | May 2018 | Source : CW-India

"We are working with around 277 urban local bodies," says Nalini Atul, JMD, Karnataka Urban Infrastructure Development & Finance Corporation

In an interaction with SHRIYAL SETHUMADHAVAN and RAHUL KAMAT, Nalini Atul, Joint Managing Director, Karnataka Urban Infrastructure Development & Finance Corporation (KUIDFC), appraises CW on the corporation's whopping Rs 140 billion PPP plan.

Introduce us to KUIDFC's role in smart cities.
Seven smart cities have been selected in Karnataka.
Belgavi was selected in the first round, with four more cities - Shimoga, Davangere, Tumkur and Mangaluru - in the third round and Bengaluru in the fifth. KUIDFC plays the role of a nodal agency through which the fund is routed and then it goes to the special purpose vehicle (SPV). The role of the nodal agency is to also oversee the overall implementation of the project in all smart cities.
We help cities, project management consultants (PMCs) and SPVs in planning, execution and monitoring.

Apart from the inflow from the government, what are the other sources of funds?
In the initial plan itself, cities were asked to identify ways to increase the outlay of the project. In general, over a period of five years, the Central and state governments will give around Rs 5 billion each.

In the initial stage, it was clear that we could do PPP and the project would pay back, based on its life-cycle - its design, its capacity to get funds from the market, and its revenue generating capacity. To that extent, in Karnataka, we have an outlay of Rs 140 billion, of which Rs 70 billion is for the Government of Karnataka and Government of India, on a share of 50:50, and Rs 30 billion will be for public-private partnership (PPP) projects that are already planned. Another Rs 40 billion approximately is in terms of convergence.

There was a discussion of municipal bonds. But if the SPV is getting funds at a cheaper rate in the market, it should not go in for an SPV bond.

Apart from property tax and water tax, urban local bodies do not have other sources of revenue generation...
We are doing projects worth Rs 50 billion. For these projects, we have taken loans from the international market, or they are funded by the Government of Karnataka. At present, not all urban local bodies (ULBs) are ready to pay water charges. One of the two areas where KUIDFC is working is project financing. We take projects, which are then financed through loan or through the state. The state government has given us around Rs 10 billion of funds and we are working with Rs 50 billion worth of funds.

Projects need to be backed by solid design...
As I said earlier, the project capability, design and implementation are crucial.
The monitoring and implementation of the project has to be perfect.
As far as Bengaluru is concerned, the city is capable. But speaking of the smaller ULBs, we have around 277 ULBs and are working with all of these.
While Bengaluru has a PMC as its head to give some guidelines, other ULBs do not have this advantage. So, we do handhold them for projects such as water supply, sewage treatment plant (STP), etc. We also work towards reforms and are working on ratings if we need to go for municipal bonds in future.

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