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Last Updated : Jun 19, 2017 10:45 AM IST | Source: CNBC-TV18

PMC muni bond issue: We have had revenue surplus every year, says municipal commissioner

The Pune Municipal Corporation (PMC) is ready to launch India's largest Municipal Bonds program totaling over Rs 2,200 crores, reports CNBC TV18.

The city of Pune is getting ready to launch India’s largest municipal bonds programme, totaling a little more than Rs 2200 crores. The money will be raised over the next 5 years and the first tranche of a Rs 200-crore issue will be listed on June 22 at the Bombay Stock Exchange. This is the first issue of municipal bond under the Modi government – and the Smart Cities Mission, and 15 more cities are lining up to launch their municipal bonds. So a lot hinges on the success of this first bond issue.

CNBC TV18’s Manisha Natrajan caught up with Kunal Kumar, Commissioner of PMC to get more details on the issue.

What will the proceeds of Rs 200 crore be used for?


This is for the 24/7 water supply scheme for Pune. Broadly, there are 3 categories of work that we will be doing. First is the construction of the network. This is again divided into two parts; replenishment and complete replacement of the old network. The second part is putting in new networks and it also includes smart metering. Third part of the work is giving adequate storage capacity through water reservoirs.

Is  this for all the citizens of Pune or for the small area of Aund-Baner-Balewadi which is selected for the Smart Cities Mission?

This is for the entire city of Pune. In fact, this is not only for the current city but for what it will be in 2047. The project has been designed for that population as well.

What are the likely coupon rates on this bond issue?

That’s something I don't decide. It will be decided online on the bidding platform of the BSE.

Is there any indicative range that you can give us?

Unfortunately, I'll not be able to speak anything about it. But we are the highest rated municipal corporation as far as credit rating goes we are double A+. The project is financially viable. The project structuring has been done extremely well and the tariff  policy is also strong. Therefore, we expect a good rate.

The bonds are not guaranteed by the Maharashtra government – will the user charges from 24x7 water supply be enough to service the interest obligation?

Financially, PMC has done much better year-on-year. Every year we had revenue surplus. To repay the bond there is a structure payment mechanism. We have a tariff policy backing the project. From the tariff we get from the water tax, part of it will go into the escrow account, which will fund the repayment and part of it will be funded from the municipal corporations property tax and other revenues. It is a mix of user charges and subsidies. Over a period of time user charges will be sufficient to take over the subsidy.

What kind of investors have shown interest so far- domestic or foreign? 

For the first tranche of Rs 200 crore we are mostly looking at the domestic investors.

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First Published on Jun 16, 2017 08:55 pm
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