The Hindu 12.03.2013
VMC puts bonds proposal on back burner
Officials asked to make detailed study of finances of the corporation
Municipal Corporation here is striving to wriggle out of
the financial crisis due to paucity of funds, but the proposal to issue
bonds has been put on back burner.
District
Collector and VMC Special Officer M. Buddha Prakash Jyothi has asked the
Corporation officials to make a detailed study of pros and cons of the
VMC finances vis-a-vis issue of bonds before embarking on the plan.
The proposal has been shelved, at least temporarily, as the Standing Committee headed by him did not approve of it, sources say.
Another
hitch: there is no clarity among the wings of the Corporation on the
bonds. All the wings, including accounts and engineering, point finger
at each other and say that they were responsible for the detailing of
bonds.
The higher ups have not given any direction in this regard, officials say.
The
VMC proposed to issue bonds worth Rs.250 crore to maintain momentum in
completion of developmental works taken up under the Jawaharlal Nehru
National Urban Renewal Mission (JNNURM) programme.
The proposal was made as the government has not released the dues to the tune of Rs.200 crore to the Corporation.
The VMC was under pressure from contractors, employees and from all corners to clear the dues.
The employees were agitated that the salaries were not being paid in time.
The salaries were overdue by two to three months some time ago.
Fixed assets
The corporation has fixed assets, including complexes and open lands, worth of Rs. 6,000 crore.
The
CRISIL and CARE, rating agencies, will give their ratings after
assessing the assets, receipts, expenditure etc of the corporation.
Though
the VMC is eligible to take a loan of Rs.400 crore based on the present
rating ‘A’, the corporation has decided to borrow only Rs. 250 crore.
The VMC accelerated the works to prepare the balance sheets of
corporation.
The then Municipal Commissioner Md.
Abdul Azeem stated that Chief Minister N. Kiran Kumar Reddy has
‘tentatively okayed’ the proposal. However, it is learnt that the
government has not agreed to give a counter guarantee to the bonds.
It
is not the first time that the proposal to issue bonds was mooted.
Similar proposals were made when Natarajan Gulzar was Municipal
Commissioner in 2005.
Then, to float tax-free bonds
on the lines of what the Municipal Corporation of Hyderabad (MCH) and
the Municipal Corporation of Visakhapatnam (MCV) was option before the
VMC to pool up resources towards its share in JNNURM.
In 2004, the general body also toyed with similar idea to take up developmental works.