World Bank approves USD 300M program to boost urban water and sewerage systems in Tamil Nadu
Dec 22, 2023
New Delhi [India], December 22 : The World Bank's Board of Executive Directors has given the green light to a groundbreaking initiative aimed at fortifying urban water and sewerage systems for approximately 2 million people in Tamil Nadu, one of India's most urbanized states.
According to the World Bank, the newly approved USD 300 million Tamil Nadu Climate Resilient Urban Development Program is set to enhance access to quality water and sewerage services, promoting climate-resilient cities in the face of escalating climate shocks such as floods and droughts.
Tamil Nadu, with its rapidly growing population, is grappling with the impacts of climate change, making access to essential services like water and sanitation paramount for building resilient urban centres.
The program will target 21 Urban Local Bodies (ULBs), upgrading their delivery systems to ensure efficient water supply and sewerage services.
Auguste Tano Kouame, the World Bank's Country Director for India, highlighted the significance of bolstering urban infrastructure in the wake of India's urbanization trend.
Kouame said, "By 2030, almost 70 per cent of India's new jobs will be generated in cities and more than 18 million people will move to cities. As centres of economic growth, it is critical to strengthen their ability to cope with the impacts of climate change and ensure continuity in basic service delivery."
The program goes beyond addressing immediate water and sewerage needs; it also focuses on creating green spaces and parks within designated areas, contributing to enhanced urban living conditions.
Moreover, the initiative plans to engage the private sector through performance-based contracts, issue municipal bonds, and facilitate urban governance reforms to fortify the financial health of ULBs.
"This Program aims to leverage the private sector by introducing performance-based contracts. In addition, it will issue municipal bonds and support urban governance reforms to improve the fiscal health of ULBs and secure the future needs of the urban population. Communities, especially women, will also play a key role in designing and supporting effective climate action plans for cities", said Raghu Kesavan, Mansha Chen, and Lilian Pena P. Weiss, the Task Team Leaders for the project.
The financing structure for the program involves a USD 300 million loan from the International Bank of Reconstruction and Development (IBRD), utilizing the blended financing instrument of Program-for-Results (PforR) with Investment Project Financing (IPF).
This approach links fund disbursement directly to the achievement of results while providing technical assistance. The Program loan carries a maturity of 32 years, including a grace period of 7 years.
Over the past two decades, the World Bank has collaborated with Tamil Nadu and ULBs to establish and scale up a state-level urban institution, functioning as a public-private partnership facility, to mobilize diverse sources of finance for urban infrastructure projects in cities.
