It will help the board get funds from financial institutions
Bangalore: As a measure to assess its financial strength, the Bangalore Water Supply and Sewerage Board (BWSSB) has become the first water utility in the country to go in for credit rating. The Board has appointed ICRA Ltd., one of India’s leading credit-rating agencies, to evaluate its financial strength in leveraging the market to raise funds. The rating will analyse the BWSSB’s debt-leveraging ratio, or its borrowing capacity.
Disclosing this to The Hindu, BWSSB chairperson G. Latha Krishna Rao said that this was an effort to “find out where and how the service oriented, no loss, no profit organisation truly stands vis-À-vis other establishments”. The rating, which should be out by November, will, according to Ms. Rao, not only allow the BWSSB to see where its finances stand, but also enable it to secure funding from the public, and financial institutions and plan its projects.
“We might feel we are good, the best… but if it comes from an independent credit-rating agency, it will have that much more weight.” Ms. Rao, who has a financial background, said that the rating exercise “will help the BWSSB to clean up its books”. It will also allow the BWSSB to “take mid-course corrective steps if necessary”.
With this in mind, the BWSSB has requested the Government to waive the Rs. 140 crore that is owed to it from the erstwhile Bangalore Mahanagara Palike (BMP). But when the then BMP Council passed a resolution not to pay, the BWSSB had no choice but to request the Government to waive the sum. According to Ms. Rao, Chief Minister H.D. Kumaraswamy had agreed to it, and the waiver would “certainly help improve our books”.
For the implementation of its projects over the years, besides funds from the Union and State governments, the BWSSB depended on borrowings from the World Bank and the Japan Bank for International Cooperation. But the BWSSB is now looking for funding from financial organisations for future projects. A good credit rating will help it to bargain with financial institutions and funding agencies and leverage loans at lower rates of interest.
With a growing Bangalore needing (according to the BWSSB’s assessment) 2,550 million litres a day (MLD) by 2036, funds will be of the utmost importance if the Board is to go ahead and complete all the envisaged projects, which anyway will only supply 1,500 MLD.
The BWSSB currently supplies 840 MLD of water to about 5.5 lakh connections in an area of approximately 300 sq. km.
The feeling in the BWSSVB is that the rating will be good since the Board right from its inception has used good accounting systems.