Mumbai, 23 June, 2017 (GPN) : Pune is amongst the few cities in the world to acquire for itself several noteworthy accolades like ‘Oxford of the East’, ‘Start-Up City’, ‘Manufacturing Hub’, ‘Queen of Deccan’, ‘Pensioners’ Paradise’, ’Cultural Capital of Maharashtra’ etc. This phenomenon underscores the fact that the city has provided a welcoming and conducive ecosystem for thriving of all aspects of human endeavor for all its citizens. Building on these strengths, Pune now aims to transform itself into ‘The Most Liveable City in India’ under the framework provided by the ‘Smart Cities Mission’ envisioned by the Hon. Prime Minister of India.
Pune’s rapid geographic and demographic growth entails a big spike in the demand for water. In order to future-proof the city from a potential situation of water crisis, Pune Municipal Corporation (PMC) proactively conceived the ambitious and futuristic ‘24×7 Water Project’.
The main objectives of this project are as follows:
Safe and Equitable water supply to all citizens for the next 30 years
Distribution of water 24 hrs every day
Reduce the amounts of water losses and ‘Non-Revenue Water’
Ensuring Technological, Economical & Environmental sustainability of the water supply service.
The above objectives are to be achieved by adopting the following approach:
Introducing universal smart-metering of water consumption and application of water charges based on the effective water consumption by the consumer
Conducting water audits by setting bulk flow meters in all stages of the water supply system
Introducing a SCADA system for timely and effective control of system operations, water quality monitoring and achieving high service level benchmarks
Undertaking systematic leakage detection and repair activity to bring down the level of ‘Non Revenue Water’ in the distribution system to the desired level of 15%
Use of GIS based technologies to integrate geo-spatial and real time data
Deploying innovative and IEC (Information, Education and Communication) strategies in print and digital media to proactively engage with all citizens
In addition to the ‘24×7 Water Project’, which primarily focuses on the demand & distribution side of the value chain, PMC has undertaken important interventions aimed at increasing the supply & availability of potable water to PMC through projects like ‘Bhama-Askhed’(ensuring additional 200 MLD supply), construction raw water conduits and water treatment plants.
PMC has supported the above mentioned infrastructure initiatives with an elaborate techno-financial-legal policy framework. It has unanimously adopted several progressive and citizen-centric guidelines and policies on adherence to service level benchmarks, stakeholder consultations, telescopic water tariffs and project-financing and debt servicing. One example of such progressive policies being put into action is the upcoming issue of PMC’s municipal bonds to finance the above mentioned project. PMC’s ‘24×7 Water Project’ also provides the city a golden opportunity to put in place reliable, affordable and safe high-speed optic fiber cables(OFC) along with the underground pipe-network. This novel utility service has the potential of becoming a robust and reliable revenue stream for PMC as the city leapfrogs into the digital age.
Pune is poised to add a new chapter in the country’s urban transformation saga based on Prime Minister’s vision of financially empowering urban local bodies. Pune launched India’s largest Municipal Bonds program (INR 2264 Crores) at 0900 hrs on June 22nd, 2017 at Bombay Stock Exchange, Mumbai. This is also the first issuance since the publication of ‘Issue and Listing of Debt Securities by Municipalities Regulations, 2015’ by Securities and Exchange Board of India (SEBI).
Recognizing the fact that Municipal Bonds can be a useful tool to meet the city’s growing infrastructure-financing needs, Pune Municipal Corporation (PMC) has been proactively working with Government of Maharashtra (GoM), Union Ministry of Finance (MoF), Union Ministry of Urban Development (MoUD), SEBI, SBI Capital Markets Ltd. (SBI Caps) and advisors from the US Department of Treasury’s Office of Technical Assistance (OTA) in developing this new financial-asset-class. The Prime Minister, while inaugurating the National Institute of Securities Markets in Navi Mumbai on December 24th, 2016, urged SEBI and Department of Economic Affairs to ensure that at least 10 cities in India issue municipal bonds within one year in the context of the ‘Smart Cities Mission’. Additionally, the Union Government has proposed to give a compensation of 2% interest subsidy on the total size of the bond issue. Both these events have been pivotal in providing an impetus to PMC’s Municipal Bonds program.
PMC proposes to raise bonds amounting to INR 200 Crores during the first tranche of its 5-year bond program (INR 2264 Crores). PMC’s Standing Committee and General Body have approved a consumption based telescopic water tariff structure for the next 30 years. This policy will progressively increase the revenues generated from the ‘24×7 Water Project’ leading it towards self sustenance. Additionally, as a part of the structured escrow payment mechanism, a portion of PMC’s Property Tax has also been pledged for the debt servicing of the bond program. As per the financial-prudence prevailing at different points in time in the future while simultaneously adhering to the relevant regulatory framework, the bonds may also be partly/fully paid from PMC’s several revenue sources. On June 12th, 2017, Government of Maharashtra has given its approval for PMC’s bond program.
Additionally, PMC has been rated as ‘IND AA+/Stable Outlook’ by India Ratings and ‘CARE AA+/Stable’ for the bond issue by CARE Ratings. The ratings provide an extremely positive assessment of PMC as a bond issuer and give an assurance to investors that the quality of their investment is amongst the best in category. PMC has adopted double entry accounting system under National Municipal Accounting Manual (NMAM) since 2006-2007. With inputs from the US Department of Treasury’s Office of Technical Assistance (OTA), it has completed an exhaustive ‘Debt Capacity Analysis’ based on the framework created by Government Finance Officers’ Association (USA and Canada). PMC can now gauge the approximate amount of debt it can sustain in the future. Using this and several other analyses, PMC has prepared a ‘Debt Management Policy’ to proactively elaborate a roadmap for sustainably servicing its debt in thelong run. The setting up of structured escrow mechanisms and appointments of intermediaries to the bond-issue (as per SEBI guidelines) has been completed. PMC’s Municipal Bonds have been receiving a positive response from potential investors as they look forward to being listed on Bombay Stock Exchange (BSE).
The city’s glorious journey is based on the twin pillars of its proactive citizenry and the consistent visionary leadership it has received over time. Pune now looks forward to building onto its strengths by setting new benchmarks of urban development in consonance with the ‘Smart Cities Mission’. With the issuance of its municipal bonds, Pune is all set to embark on an even faster, equitable and sustainable growth trajectory for the well-being its citizens.ENDS.