Ghaziabad Nagar Nigam (GNN) on Thursday announced successfully raising and listing India’s first Green Municipal bond issue. GNN raised ₹150 crore at a cost of 8.1 per cent.

Money will be used clean up dirty water by setting up a tertiary water treatment plant and supply piped water through water-meters to places like Sahibabad.

“We received ₹401 crore subscription from some 40 investors participated for the Ghaziabad Green Municipal Bond which indicates the interest in the bond issue,” Mahender Singh Tawar, Municipal Commissioner, GNN, said in a conference.

It is one of the most competitive rates at which a city has raised the funds, added speakers at the event.

Ghaziabad is debt-free and has maintained a revenue surplus position in the last few years, according to India Ratings, which rated the paper.

Ashish Chauhan, MD and CEO, BSE, said that this listing will develop the green bond market for urban local bodies like. He added that Bombay Stock Exchange as a platform can now be used by urban local bodies to raise funds.

“Foreign Infrastructure Investors are also looking at this platform…This shows the transparency of Urban Local Bodies,” said Chauhan.

Other cities in the list

Varun Kaushik, Director, AK Capital, which was the lead manager for the issue, informed that in the next year, bonds can be expected from Kanpur, Agra, Varanasi. The lead manager, who also had the mandate to raise ₹200 crore through bonds for Lucknow, pointed out that Lucknow bond issue was subscribed four times as well.

Durga Shankar Mishra, Secretary, Ministry of Housing and Urban Affairs shared that so far apart from Ghaziabad, nine cities have earlier raised municipal bonds. These are Ahmedabad, Surat, Visakhapatnam, Amravati, Indore, Bhopal, Pune, Hyderabad and Lucknow.

Referring to Ghaziabad’s water treatment plant, Mishra said Chennai has such tertiary water treatment plant where the input is sewage water and output is drinking water. Mishra further added that he drank the treated water from the plant in Chennai, which is better than branded drinking water sold in the market.

Credit rating for cities

“It is important to get cities credit rated…It will bring in a sense of pride in the cities…Balance-sheets of the cities will improve..,” said Keshav Verma, Advisor, UP Government, who was posted in Ahmedabad, when Ahmedabad raised ₹100 crore bonds for seven year tenure several years ago.

Verma added that the Urban Development Ministry has provided a two per cent interest subvention, which means effectively Ghaziabad has raised funds at six per cent.