This is the first municipal bond not only in Uttar Pradesh but the whole of North India. Lucknow is the new bond! It is the first city in the North India region—and tenth in the country—to release the bond of its municipal corporation for infrastructure financing. Amid a pandemic year, the Uttar Pradesh capital has bounced back with its city development plans. Ajay Kumar Dwivedi, Municipal Commissioner, Lucknow Municipal Corporation, discusses the success of the municipal bond, smart city projects, and upcoming opportunities for the building and construction industry, in conversation with SHRIYAL SETHUMADHAVAN. Tell us about the success of the municipal bond raised by Lucknow Municipal Corporation. This process started almost a year ago when the Cabinet passed a note indicating that a municipal bond should be issued by municipal bodies in Uttar Pradesh. We started with the effort; Lucknow Municipal Corporation received a ‘Double-A rating’ and that was the basis to get this bond issued. We then went on to improve our accounting and auditing system; our entire balance sheet was put in order. We then registered with SEBI for the issuance of the bond and roped in a transaction advisor who helped us attract investors. The base price of our bond was Rs 100 crore and Rs 100 crore was the greenshoe option. We took permission from the government to float a Rs 200-crore bond. Finally, when our bond was out for bidding, it was oversubscribed 4.5 times with around 450 crore subscriptions. This is the first municipal bond not only in Uttar Pradesh but the whole of North India. Also, we received this investment at an attractive coupon rate of 8.5 per cent; this is the second lowest among all the 10 municipalities—Lucknow being the tenth—who have floated a bond. How will the raised amount be utilised? The raised amount will be utilised for two projects: a Rs 195-crore housing project and a Rs 5-crore water supply project. Tenders have already been floated for both projects. The housing project has been planned for around 18 towers, comprising a total of 700 apartments. The plan includes a commercial area as well as a shopping complex. We will provide affordable housing to the EWS and LIG/MIG category and comfortable housing for HIG. The housing project is located adjacent to another private housing project, Omaxe City, which has already been sold out. Evidently, the commercial potential is high and we are in touch with many organisations where people are willing to go for pre-booking of our flats. We expect that most of our flats will be pre-booked as soon as the project is launched. The water supply project is a smaller portion in the entire pond. It will provide potable drinking water to around 2,500 families. Why are municipal bonds important for a city? Raising money through a municipal bond is an indicator that the municipal body has reached an advanced stage of working. To raise money through bonds, the municipal corporation requires a lot of financial discipline. At Lucknow, as mentioned, we have improved the accounting and auditing system and raised the financial discipline to a standard that enabled us to raise money from the market. It was only when we were rated as Double A that we were able to float the bond. So, it is not just about raising money; it is also about improved working conditions, improved transparency and financial discipline within a municipal corporation. This basically enhances the credibility of the municipal body and the city. Speaking of city development, what is the one challenge you face as the municipal commissioner? As municipal commissioner, my primary focus is on maintaining cleanliness. And within cleanliness, the focus is on door-to-door waste collection. In this effort, changing behaviour is the most challenging. We have deployed vehicles to collect waste and segregated waste—wet and dry separately—yet there are people throwing waste on the roads and streets. Changing this behaviour is the most challenging aspect. How has the year 2020 impacted Lucknow’s smart city plans? As such, projects were already formulated and execution plans on almost all projects were going on. However, owing to COVID, there has been a delay of almost four or five months as no construction activity could take place. Projects such as sewer lines and laying smart roads involve a lot of construction and these were affected and delayed. But now, these projects have picked up speed and we should be able to complete all the projects almost in time. Any smart advancements made by the city in its functioning to survive the pandemic year? Initially, the Corona pandemic was severe in Lucknow, especially as it is the capital of Uttar Pradesh with a high population density. During these pandemic months, the corporation has provided many services, especially in sanitisation, barricading of areas declared as containment zones and, most important, community kitchens. There were several migrant laborers in the city and many people such as rickshaw pullers who were unable to earn their livelihood. So we provided food to everybody through our community kitchens. This effort has been appreciated. What is the opportunity in Lucknow city for the building and construction industry? There are a lot of opportunities in Lucknow. Under smart city, we are taking up projects such as smart road, sewer line construction, the drinking water supply project, and many other big construction projects. Further, the Lucknow Nagar Nigam also takes on some large-scale projects. Hence, there are many opportunities for the construction and building industry. I would invite them to Lucknow so we have more competition and an opportunity to get quality people into our construction work. Which large-scale projects come under the municipal corporation? These include road construction, laying of interlocking streets and pathways, construction of drains and small-scale building construction. We are also going to take up some projects under the PPP model. Land parcels of 10,000 sq m to 20,000 sq ft that have commercial potential have been identified in the Nagar Nigam. Our plan is to develop these on a PPP model for either commercial construction or residential apartments. We could also build townships, shopping complexes and malls. We have identified some properties and would like to invite stakeholders under the PPP model to help us utilise these plans. We will soon be floating the expression of interest (EoI), following which companies can submit their proposals. What is the city’s annual budget? The annual budget is around Rs 2,000 crore. Some of it basically comes from the corporation’s earnings through taxes; this is around Rs 300 crore from tax, advertisements and other sources. The remaining amount is received from the state financing commission and central financing commission.