World Bank to provide $400 million loan for TN urban development project

The World Bank on Wednesday signed an agreement for a $400-million IBRD loan assistance for Tamil Nadu Sustainable Urban Development Project with the government of India and the government of Tamil Nadu.

The project loan will help improve urban services in participating urban local bodies (ULBs) in a financially sustainable manner and to pilot improved urban management practices in selected cities. The total project size is $600 million, out of which World Bank support is $400 million.

The project involves investment in urban services, result-based grants for urban governance and urban sector technical assistance.

The project will support improvement in range of urban services, including water, sewerage, municipal solid waste, urban transportation, sewerage management and storm water drainage. The project also envisages creation of a reserve fund to provide credit enhancements for municipal bonds and other market based loan instruments issued by ULBs.

The project will provide results-based grants to eligible ULBs to implement new urban-management models that strengthen governance and financial sustainability.

The project will also support strengthening the capacity of ULBs and urban sector officials.

The project consists of three main components:

• Investment in urban services to improve a range of urban services like water, sewerage, municipal solid waste, urban transportation, sewerage management and storm water drainage.
• The project also envisages creation of a reserve fund to provide credit enhancements for municipal bonds and other market based Loan instruments issued by urban local bodies.
• Result-based grants for urban governance to the eligible local bodies to implement new urban-management models that strengthen governance and financial sustainability.
• Urban sector technical assistance by strengthening the capacity of urban local bodies and urban sector officials.