Thane civic body plans Rs 100 crore bond float

Thane Municipal Corporation (TMC) plans to float bonds worth Rs 100 crore to finance its ambitious Rs 432 crore sewage scheme.

Thane municipal commissioner Sanjay Sethi said, "A resolution to this effect was passed by the TMC general body on Wednesday."

He further said, "Earlier there was a restriction put by the Union government on municipal corporations for raising more than Rs 50 crore from bonds or institutional finance. But this restriction was removed recently, so we have decided to take advantage of this decision."

TMC at present handles around 54 million liters per day (MLD) of sewage and it has plans to raise this capacity to 355 MLD in three years. Under the project, three sewage treatment plants would be also constructed.

There would be four components for raising Rs 432 crore. Rs 100 crore will be raised through bonds, Rs 140 crore through loans from financial institutions and a grant of 23.3 per cent from the state government (which state government gives to all municipal corporations for their water supply and sewage projects) and the rest would come through internal accruals, Sethi said.

"Currently, we have got "AA" rating from credit rating agencies. Except for Hyderabad Municipal Corporation, no other municipal corporation has got a better credit rating than us," he added.

"However, since we are carrying out a lot of financial reforms with the help of USAID and the International Finance Corporation (IFC), we are confident that our credit rating will go up.

In this case, we will go for fresh rating before floating the bond issue," he said. For institutional loans, the corporation is already in talks with IFC and IL&FS, he added.