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WATER AND SANITATION POOLED FUND

BACKGROUND

Water and Sanitation Pooled Fund (WSPF), a Trust managed by Government of Tamil Nadu, has been created in the year 2002 to mobilize resources from the capital market and to finance urban infrastructure projects. This Fund has been functioning on no-profit no-loss basis. This is the first entity in the country to mobilize resources on the pooled finance framework.

The Government of Tamil Nadu has designated WSPF as the State Pooled Finance Entity under Pooled Finance Development Fund Scheme and authorized it to operate according to the guidelines issued by the Government of India.

POOLED FUND CONCEPT AND MARKET ACCESS

A pooled entity has been created by GoTN in the name of Water and Sanitation Pooled Fund (WSPF) and registered as Trust under the Indian Trust Act 1882. This trust would identify viable projects and fund them from concept to commissioning on a sustainable basis. The fund would make the Urban Local Bodies (ULB) a part of the active debt markets so as to avail the best interest rates available in the market.

As a pioneering effort for market access, certain ULBs and a few of their projects have been selected to be financed / refinanced by the proceeds of WSPF bond issue. The projects have been selected after careful consideration of their financial viability and commitment towards development.

MANAGEMENT OF WSPF

WSPF is managed by Board of Trustees and the Board of Trustees comprises of officials of Government of Tamil Nadu as detailed below:

Principal Secretary to the Government,
MA & WS Department Department

Chairman

Principal Secretary to the Government,
Planning & Development Department

Member

Principal Secretary to the Government,
Finance Department

Member

Secretary to the Government,
Housing & Urban Development Department

Member

Managing Director, TNUIFSL

Member - Secretary

 

The Board of Trustees of the Fund prescribes policies and procedures for the operation of the Fund. WSPF is functionally operated by the Fund Manager viz., Tamil Nadu Urban Infrastructure Financial Services Limited.

OBJECTIVES OF WSPF

The main purpose of the Fund is to channel increased financial resources including private financing, into high priority infrastructure investment, contributing directly to improved living standards of urban population. The objectives of the Trust are:

  • Mobilize resources for urban infrastructure projects under pooled finance structure,
  • Provide financial assistance for setting up infrastructure projects,
  • Enable urban local bodies to access debt finance from market and
  • Act as Nodal Agency on behalf of Central and / or State Government for water, sanitation and / or any other infrastructure projects.

RESOURCE MOBILIZATION

WSPF had raised a sum of Rs.222.30 crs by issue of bonds under pooled bond framework as detailed below:

Amount ( Rs. in crs)

30.41

6.70

83.19

51.00

51.00

Interest rate

9.20%

7.25%

7.50%

10.60%

8.71%

Tax Status

Taxable

Tax-free

Tax-free

Taxable

Taxable

Credit Rating

AA(SO)

AA(SO)

AA(SO)

AA(SO)

AA(SO)

Tenor (Years)

15

10

10

10

10

No. of beneficiary ULBs

13

5

7

10

10

Bond Service Fund / Credit Rating Enhancement Fund ( Rs.in crs)

6.90

1.50

18.50

19.00

Month and Year

Dec 2002

Feb-Apr 2008

Sep 2010

Aug 2012

May 2013

Balance outstanding as on 31.03.2015 ( Rs.in crs)

3.84

5.36

83.19

51.00

51.00

The Participant ULBs are regular in payment of debt service to WSPF. The WSPF has honoured all the service payments on the respective due date(s).

 

National River Conversation Project (NRCP)

During the year 2003, the Government nominated the WSPF as the nodal agency for arranging funds (towards State Governmentís Contribution) for implementation of the Under Ground Sewerage Projects under NRCP. Accordingly, a sum of Rs.93.99 crores has been borrowed by WSPF from Tamil Nadu Urban Development Fund towards State Governmentís share of contribution under NRCP and the same has been provided for implementation of the schemes. The balance outstanding as on 31.03.2015 is Rs.40.23 crores. The debt service of loans borrowed by WSPF is provided by Government of Tamil Nadu through budgetary allocation, every year.

National Lake Conversation Project (NLCP)

During the year 2004, the Government nominated the WSPF as the nodal agency for arranging funds (towards State Governmentís Contribution) for implementation of the Kodaikanal Lake Conservation Project implemented under NLCP. Accordingly, a sum of Rs. 1.73 crores has been borrowed by WSPF from Tamil Nadu Urban Development Fund towards State Governmentís share of contribution under NLCP and the same has been provided for implementation of the schemes. The balance outstanding as on 31.03.2015 is Rs. 1.44 crores. The debt service of loans borrowed by WSPF is provided by Government of Tamil Nadu through budgetary allocation, every year.

ACTION PLAN

The fact that urban infrastructure investments require long-term finance is well understood. Especially well known is the fact that unless the domestic debt market has sufficient depth, the scope for large volume trades in Municipal Debt instruments is limited. Quite apart from these macro considerations, at a more micro level, capital markets even with sufficient depth could not directly on account of economies of scale service sector specific small municipal projects. Hence, the needs for intermediation like WSPF.