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Context
Government of Rajasthan has been taking a number of initiatives in the urban sector – both in the area of legislative reforms and good governance; and investments in urban infrastructure. The ADB supported Rajasthan Urban Infrastructure Improvement Project, JNNURM and other schemes are investing significant resources in its’ large cities. Not to be left behind, many small towns too are being taken up under a programmatic approach.
Five high-growth towns have been identified (viz. Pali, Bhilwara, Behror (Alwar), Kotputli (Jaipur), and Sri Ganganagar), that will initiate infrastructure financing through market based lending. To be blended with grant funding, budgetary support and own sources, these towns will explore raising debt through pooled-finance instrument for priority urban infrastructure works.
Project Concept
What distinguishes this initiative from earlier debt based project financing are:
- The selected small towns possess high growth potential by virtue of their location along Delhi – Mumbai National Highway, and being part of Delhi-Mumbai Industrial Corridor that is being concieved.
- The cities will pool their debt requirements and collectively raise debt to fund their projects, thus offering a balanced risk profile rather than individual projects
- The cities will seek to leverage land-based financing instruments to support their debt repayment obligations.
The challenge therefore lies in project identification; project packaging; structuring the project financing package which includes the debt package, and finally raising debt from financial markets / institutions.
Status
City Development Plans (CDPs) have been prepared for three of the five towns. Consulting services are being procured to undertake detailed studies, leading to preparation of debt package, credit rating the pooled-finance instrument, and raising of required debt. Consulting services should be finalised soon. Building the consensus for such financing methods, and all other preparatory work will take about 12 calendar months of effort.
IUSF role
IUSF is advising the nodal agency of Govt. of Rajasthan, viz. RUIFDCO (Rajasthan Urban Infrastructure Finance & Development Corporation) in this exercise. Such support being rendered on pro-bono basis, is another effort of IUSF in bridging the knowledge gaps and enabling linkages between market players and urban infrastructure agencies.
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