The State Government has accorded permission to the Hyderabad
Metropolitan Water Supply and Sewerage Board (HMWS&SB) to obtain an
additional loan of `1,000 crore from Housing and Urban Development
Corporation HUDCO with government guarantee (for principal part only) as
security for early completion of Godavari Drinking Water Supply Project
to meet the drinking water scarcity in Hyderabad and surrounding
municipalities,

The government has issued orders giving counter
guarantee subject to the condition that the budgetary support will not
be provided through out the currency loan and the guarantee will be
given only for principal part only.

The GDWSP Phase-I (Moulana
Abdul Kalam Hyderabad Sujala Sravanthi Scheme – MAKHSSS) is taken at a
cost of `3,375 crore with source at Pranahita with the funding share
from State Government, Greater Hyderabad Municipal Corporation and
Central Government.

Due to non-materialisation of the funding
pattern, State Government  permitted HMWS&SB to avail loan
assistance (non-recourse loan) of `1,000 crore from Housing and Urban
Development Corporation  (HUDCO) without government guarantee for the
project.

Accordingly, Water Board has concluded the loan agreement
with HUDCO and the funds are being drawn from HUDCO as per progress of
works and also Government is releasing its share amount to the
HMWS&SB for early completion of the project.

For the ongoing
works, government has released an amount of `1,287 crore through budget
and HUDCO provided `750 crore out of `1000 crore loan for the project
and against which an expenditure of `1,978.05 crore was incurred
including Land Acquisition and the works are in brisk progress and that
of connected two ring mains are also grounded and are in progress.

HMWS&SB
further submitted that it was necessary to avail the additional loan of
`1,000 crore from HUDCO to have full financial closure for the project
apart from government budgetary support for completion of all the
components in the project.

The Board has informed that the HUDCO
has in principle accorded sanction of the additional loan of `1000 crore
for completion of the project and one of the conditions stipulated for
the second loan is to obtain counter guarantee from the government with
budgetary support for repayment of principal and interest to this second
loan, as already all the assets of HMWS&SB have been mortgaged with
HUDCO towards the first loan of `1,000 crore.