NADU URBAN DEVELOPMENT FUND
Municipal Development Funds provide a much
needed link between civic infrastructure financing needs and
domestic capital markets. The urban financing challenge for
Tamilnadu, given the high urbanisation trends and undersupply
of civic infrastructure is self-evident.
Since 1988, Government of Tamil Nadu has
been implementing the Tamil Nadu Urban Development Project
(TNUDP) which was financed by International Development Agency
(IDA) of World Bank, of which one of the components was the
Municipal Urban Development Fund (MUDF).
The successful track record of MUDF encouraged
Government of Tamil Nadu to broaden the scope of the Fund,
with a view to attracting private capital into urban infrastructure
and facilitate better performing ULBs to access capital markets.
TNUDF was established on November 29, 1996,
as a trust under The Indian Trust Act 1882., for development
of urban infrastructure in the state of Tamilnadu. TNUDF was
formed by conversion of Municipal Urban Development Fund (MUDF),
with contribution from Government of Tamil Nadu along
with all India financial institutions viz., ICICI Bank
Limited (formerly ICICI Ltd), Housing Development
Finance Corporation Limited and Infrastructure Leasing
and Financial Services Limited. TNUDF is the first public-private
partnership providing long term debt for civic infrastructure
on a non-guarantee mode. TNUDF is managed by a Corporate Trustee
viz., Tamil Nadu Urban Infrastructure Trustee Company Limited
(TNUITCL). The Board of Trustees
periodically review the lending policies and procedures.
Tamil Nadu Urban Infrastructure Financial Services Limited
(TNUIFSL) is the Fund Manager of TNUDF.
- Fund Urban Infrastructure projects, which improve the
living standards of the urban population
- Facilitate private sector participation in infrastructure
through joint venture and public-private partnership
- Operate a complementary window, the Grant Fund, to assist
in addressing the problems of the urban poor
- Improve the financial management of urban local bodies
enabling them to access debt finance from markets
- Urban Local bodies (Corporations, Municipalities &
- Any Private Institutions who creates urban infrastructures.
A sum of Rs.1441.85 crores is available with TNUDF for
providing financial assistance for implementation urban
( Rs. in crores )
( Rs. in crores )
World Bank - TNUDP II
World Bank – TNUDP
JICA - TNUIP
KfW – SMIF - TN
Tamil Nadu Urban Development Project – III
(TNUDP-III) assisted by World Bank
TNUDP III was launched on 19 th October 2005. The objectives
of TNUDP III are as follows:
- To develop Tamil Nadu Urban Development Fund as financial
intermediary to provide financing for infrastructure to
ULBs on a sustainable basis.
- To strengthen urban reforms and consolidate the achievements
under TNUDP-II in institutional strengthening and capacity
- To provide a grant to the Chennai Metropolitan Development
Authority (CMDA) to take up traffic and transportation
sub-projects in the Chennai Metropolitan Area.
The total outlay of the project is US
$ 434 mn (equivalent to about Rs.1996 crores), of which
World Bank line of credit is US $ 300 mn (equivalent to
about Rs.1380 crores). The Project consists of two components
namely (i) Institutional Development Component (IDC) managed
by Commissionerate of Municipal Administration and (ii)
Urban Investment Component (UIC) managed by TNUIFSL. The
funds under IDC provides for technical assistance and training
needed to build capacity to further the devolution process,
where as the funds under UIC is used to finance sustainable
urban projects implemented by ULBs.
TNUDP-III was restructured during the financial
year 2009-10 and the quantum of financial assistance under
investment component to ULBs has been increased to US $
307.50 mn (Loan of US $ 131 mn. and Grant of US $ 176.5
mn) from US $ 204.5 mn. Consequently, funding assistance
available under TNUDP III to ULBs will be Rs.1414.50 crores
(Rs.602.60 crores in the form of loan and Rs.811.90 crores
in the form of capital grant). A sum of Rs.1364.06 crores
(term loan of Rs.564.05 crores and capital grant of Rs.800.01
crores) has been committed for 101 projects, of which 72
projects are completed and 29 projects are in progress.
The balance fund available is Rs.50.44 crores (loan of Rs.38.55
crores and grant of Rs.11.89 crores). The total funds disbursed
to sub-projects up to 31st March 2011 is Rs.697.26 crores
(Rs.328.75 crores as term loan and Rs.368.51 crores as capital
grant), based on the progress of the sub-projects.
The project completion period TNUDP III
is 31st March 2012. However, some of the sub-projects under
implementation may require time up to 31st March 2014 for
completion. In view of the above, Government of Tamil Nadu
has approved the extension of time up to 31st March 2014
and forwarded the proposal to Government of India for onward
transmission to World Bank requesting for extension of time
for TNUDP-III up to 31st March 2014.
Tamil Nadu Urban Infrastructure Project (TNUIP)
assisted by Japan International Co-operation Agency (JICA)
TNUIP was launched on 25th March 2008.
The Project implementation period is five years. The objective
of the Project is to provide safe and reliable water supply
and sewerage services in ULBs by providing long-term financial
assistance to construct and improve water supply and sewerage
facilities, thereby contributing to improvement of living
conditions of local residents in the concerned areas.
The total outlay of the Project is JPY 9824 million (equivalent
to about Rs.345 crores), of which JICA’s line of credit
is JPY 8551 million (equivalent to about Rs.300.04 crores).
The line of credit consists of Rs.283.23 crores towards
implementation of water and sewerage projects and Rs.16.81
crores towards technical assistance.
The project envisages funding for water supply and sewerage
sectors. Considering the field difficulties in implementing
the sewerage schemes within the project completion period
(June 2013), it was decided to utilize the entire funds
for water supply sector. Accordingly, the funds were committed
for implementation of six Water Supply Improvement Schemes
(viz. Trichy Corporation, Madhavaram, Palani, Coonoor, Idappadi
and Devakottai Municipalities). The Government of Tamil
Nadu has approved the proposal of reallocation of the entire
funds to water supply sector and forwarded the proposal
to Government of India / JICA for reallocation.
As of 31st March 2011, the entire amount of Rs.283.23 crores
has been committed (loan of Rs.180.50 crores and grant of
Rs.102.73 crores) for six water supply projects and all
the projects are under implementation / various stages of
procurement. A sum of Rs.107.95 crores (Rs.83.30 crores
as loan and Rs.24.65 crores as grant) has been disbursed
up to 31.03.2011.
Sustainable Municipal Infrastructure Financing
– Tamil Nadu (SMIF-TN) assisted by KfW
SMIF-TN was launched with the assistance
of KfW and the loan documents have been executed on 9th
July 2008. The objective of the Project is to promote municipal
infrastructure projects with positive environmental effects
in Tamil Nadu, to promote private financing for urban infrastructure
projects and to develop municipal bond market through Master
Financing Indenture (MFI).
The total outlay is Euro 77 million (equivalent to about
Rs.500 crores) consisting of Euro 65 million (equivalent
to about Rs.422 crores) for financing urban infrastructure
projects (Rs.271.20 crores in the form loan and Rs.150.80
crores in the form of capital grant), Euro 10 million (equivalent
to about Rs.65 crores) as loan to Water and Sanitation Pooled
Fund for development of municipal bond market, and Euro
2 million (equivalent to about Rs.13 crores) towards grant
for strengthening the technical capabilities.
As of 31st March 2011, a sum of Rs.421.89 crores (term loan
of Rs.271.09 crores and capital grant of Rs.150.80 crores)
funds have been committed for 14 sub-projects. The balance
fund available is Rs.0.11 crores as loan. All the 14 sub-projects
funded under this scheme are under implementation. A sum
of Rs.145.66 crores (Rs.92.15 crores as term loan and Rs.53.51
crores as capital grant) has been disbursed up to 31.03.2011.
MONITORING & RECOVERY
As for monitoring and recovery, efforts are
made to assess the credit risk and concentration of credit.
Wherever undue delay is noticed in repayment of dues, close
follow-up action is being pursued. Necessary provision has
been included in the loan agreement to escrow the collections
of ULBs and / or to maintain a Debt Service Reserve Fund as
the case may be. TNUDF has achieved record 100% collection
efficiency continuously for the past seven financial years.
As on 31.03.2011, there are no non-performing assets.