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U.S., INDIA COLLABORATE TO BRING WATER
TO 1.2 MILLION RESIDENTS OF GREATER BANGALORE
July 01, 2005
Bangalore -- The United States and Government
of Karnataka today signed a financing agreement
that will expand access to clean water to 1.2
million Indians who live in eight towns
surrounding Bangalore City. A partial credit
guarantee from the U.S. Government will help the
“pooled” municipalities issue a bond on the
capital market at reasonable rates.
Funds raised through the debt market will
finance water and sanitation infrastructure as
part of a major $150 million (Rs. 649.5 crores)
water and sanitation public works project for the
area.
U.S. Agency for International Development
(USAID) India Director George Deikun signed the
credit guarantee agreement in the presence of
Chief Minister of Karnataka Dharam Singh and Union
Minister of Finance P. Chidambaram.
“Creating a world class infrastructure must be
the highest national priority in India,” said Mr.
Deikun. “Reliable services in an economic and
high-tech hub such as Greater Bangalore will
attract more investment and create conditions for
sustainable growth. It will also greatly improve
the daily lives of all of India’s citizens,” he
said.
The pooled financing structure employed was
developed by the United States Agency for
International Development (USAID) to give smaller
urban bodies access to infrastructure capital via
the debt market. Karnataka will use the model to
mobilize $23 million (Rs. 99.59 crores) from
domestic investors to partially fund the water
project. Other funds will come from the state and
union governments, and contributions from customer
households.According to Mr. Deikun, the U.S.
credit enhancement guarantee lowers the cost of
borrowing for the eight cities when compared to
traditional sources of institutional finance.
The credit
guarantee is part of a broader, five-year, $16
million (Rs. 69.28 crores) urban development
initiative between USAID and the Government of India
to improve local government services and public
works nationwide. The effort follows a decade of
joint efforts between the U.S. and India to develop
domestic debt markets for urban improvements.
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