THIRD TAMIL NADU URBAN DEVELOPMENT PROJECT

TNUDP III was launched on 19th October 2005. This is a repeater project of TNUDP II and would be to consolidate the achievements of TNUDP II, thus continuing to improve urban infrastructure services in Tamil Nadu in a sustainable manner.

The objectives of the project are as follows:

• To develop Tamil Nadu Urban Development Fund (TNUDF) as a financial intermediary to provide financing for infrastructure to ULB on a sustainable basis.
• To strengthen urban reforms and consolidate the achievements under TNUDP-II in institutional strengthening and capacity building
• To provide a grant to the Chennai Metropolitan Development Authority (CMDA) to take up traffic and transportation sub-projects like road widening, ROBs and RUBs in the CMDA area.

COMPONENTS OF THE PROJECT

The Project consists of two components, an Institutional Development component (IDC) and an Urban Investment component. The IDC provides the Technical Assistance (TA) and training needed to build capacity to further the devolution process.
The following are the funding pattern:

INSTITUTIONAL DEVELOPMENT COMPONENT

The Institutional Development Component is to be utilized for:

• Capacity Building of Municipal Staff through continued training programs enhancing demand responsive managerial and technical capabilities at the ULB level;
• Information and communication technology, expanding e-governance and networking of municipal functions;
• Establishment of a Debt Monitoring Cell (DMC) in the CMA for maintaining up to date information on ULB finances;
• Technical Assistance to ULBs for project preparation and supervision (Project Preparation Facility); and
• Project Management, including Incremental Operating Costs strengthening the municipal monitoring framework, performance benchmarking and increasing transparency and accountability;

URBAN INVESTMENT COMPONENT

The Urban Investment component finances:

• part of the ULBs urban infrastructure pipeline over the next five years through a line of credit and capital grants to the TNUDF; and
• a grant for the development of urban roads and related components in the Greater Chennai Metropolitan Area through the Chennai Metropolitan Development Authority.

Urban Investment Component consists of Capital Grant to ULBs and Loan to ULBs. The Urban Investment component will aim at developing sustainable urban investments such as water supply, waste water collection, solid waste management, storm water drains, roads and common facilities such as transportation networks, and sanitation facilities, based on demand driven investment plans developed by ULBs. While investments will be spread over ULBs throughout the State, part of the component will also support grants for urban road infrastructure and traffic management programs in the Greater Chennai Metropolitan Area which includes surrounding the peri-urban areas. The investments would include road widening, bridges, traffic studies and traffic management, and road safety sub-components.

The Urban Investment component includes support to TNUDF through a line of credit and provision of grant funds for the Project Development Advisory Facility (PDAF) for preparing and/or supervising projects that involve innovative sub-project financial structuring and Capital Grant component to finance environmental and social mitigation actions and sub-projects serving the lowest income groups. However, in addition to the line of credit, project design would seek to expand TNUDF’s financial role to include credit enhancement support through other instruments—such as debt service reserve funds, partial guarantees, first loss guarantees, bond insurance and subordinated debt instruments which would assist the overall objective of providing sustainable access to the capital markets and commercial financing to ULBs.

PROJECTS UNDER IMPLEMENTATION

The entire fund under investment component to ULBs has been committed to various projects. The detalis of the projects are attached below:

• Status of Projects