Officials asked to make detailed study of finances of the corporation
Municipal Corporation here is striving to wriggle out of the financial crisis due to paucity of funds, but the proposal to issue bonds has been put on back burner.
District Collector and VMC Special Officer M. Buddha Prakash Jyothi has asked the Corporation officials to make a detailed study of pros and cons of the VMC finances vis-a-vis issue of bonds before embarking on the plan.
The proposal has been shelved, at least temporarily, as the Standing Committee headed by him did not approve of it, sources say.
Another hitch: there is no clarity among the wings of the Corporation on the bonds. All the wings, including accounts and engineering, point finger at each other and say that they were responsible for the detailing of bonds.
The higher ups have not given any direction in this regard, officials say.
The VMC proposed to issue bonds worth Rs.250 crore to maintain momentum in completion of developmental works taken up under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) programme.
The proposal was made as the government has not released the dues to the tune of Rs.200 crore to the Corporation.
The VMC was under pressure from contractors, employees and from all corners to clear the dues.
The employees were agitated that the salaries were not being paid in time.
The salaries were overdue by two to three months some time ago.
The corporation has fixed assets, including complexes and open lands, worth of Rs. 6,000 crore.
The CRISIL and CARE, rating agencies, will give their ratings after assessing the assets, receipts, expenditure etc of the corporation.
Though the VMC is eligible to take a loan of Rs.400 crore based on the present rating ‘A’, the corporation has decided to borrow only Rs. 250 crore. The VMC accelerated the works to prepare the balance sheets of corporation.
The then Municipal Commissioner Md. Abdul Azeem stated that Chief Minister N. Kiran Kumar Reddy has ‘tentatively okayed’ the proposal. However, it is learnt that the government has not agreed to give a counter guarantee to the bonds.
It is not the first time that the proposal to issue bonds was mooted. Similar proposals were made when Natarajan Gulzar was Municipal Commissioner in 2005.
Then, to float tax-free bonds on the lines of what the Municipal Corporation of Hyderabad (MCH) and the Municipal Corporation of Visakhapatnam (MCV) was option before the VMC to pool up resources towards its share in JNNURM.
In 2004, the general body also toyed with similar idea to take up developmental works.