Amaravati: The Capital Region Development Authority (CRDA) has come up with a finance plan to bridge the gap between the actual requirement of funds for the construction of the upcoming capital Amaravati and available resources. As against the total estimate of Rs 58,000 crore required over a period of 20 years, the CRDA has been able to pool only Rs 14,200 crore till now. The new means of fund raising will help the CRDA to raise another Rs 14,250 crore over the next three years and keep the project up and going.
The new means of raising funds include building infrastructure through the PPP model, Lease Rental Discounting (LRD), Equity Funding (Government to Government), Collective Investment Fund (CIF) and Bonds.
For the phase one projects to be taken up in the next five years, PPP models for utilities (power, water) are being explored.The CRDA has already conducted workshops with the relevant players to understand the interest and requirements of the market.
The second option is (LRD).This mode of funding is being explored for the construction of heads of department buildings and employee housing within the government complex and also the Seed Capital Area (SCA). Equity Funding (Government to Government) fund is being explored as cost effective means of raising equity capital which can have a long term investment plan and focus on cash-flow generating social infrastructure.
The CIF is aimed at retail investors with land as collateral and management fees paid to the CRDA. Development can include residential, commercial, retail as well as social infrastructure. This would be aimed at longer term land monetization. According to sources, the CRDA is planning to mobilize the funding immediately through these sources.
Bonds are yet another source of raising funds. The CRDA has the permission of the government to raise bonds worth Rs 2,000 crore through Masala bonds and is also in the process of engaging a merchant banker as advisor for the issue of bonds. Masala bonds are those that are issued outside India but denominated in Indian rupees instead of the currency of that country The estimates show that in the first three years itself, Rs 32, 000 crore would be required for the construction of Amaravati. The Rs 14,200 crore that is in the CRDA ‘s kitty at present has been raised through loan from World Bank and Housing and Urban Development Corporation (HUDCO) and funds from the centre. Of the total Rs 32,000 crore needed over the next three years, Rs 10,816 crore would be for creating infrastructure and Rs 4,967 crore for construction of roads.