AMC set to become 1st urban local body to issue green bonds
After a year’s wait for the central government nod to issue tax-free bonds, Ahmedabad Municipal Corporation (AMC) is finally set to issue green bonds, reportedly the first Urban Local Body (ULB) to issue such bonds in the country.
The civic body has been exploring new ways to raise money through the market, eyeing international investors as well.
In his draft budget for the 2018-19 fiscal, civic chief Mukesh Kumar has proposed to issue green bonds worth Rs 200 crore.
Green bonds are expected to bring a solution to the issue of Pirana garbage dump as AMC may utilise the money raised from selling the bonds to initiate bio-mining of the garbage hill. The money raised from green bonds is primarily utilised for projects in sanitation, cleanliness and waste recycling.
“We will now carry out all the paper work required to issue green bonds and then send our proposal to the state government, followed by the Ministry of Urban Development and then to the Ministry of Finance,” said Amish Shah, chief accountant of the AMC. Shah said the AMC is planning to invest in electric vehicles.
AMC currently has a stable AA rating from Fitch and CRISI, awarded in 2016. The rating is an evaluation of bond issuers and a must as per a Securities and Exchange Board of India (Sebi) guideline.
“The rating won’t change for AMC, but we will still have to write to Sebi stating we are going to change the format of bonds from tax-free to green bonds. International players, too, can invest in our projects,” added Shah.
In 2009-10, Sebi issued guidelines to all the ULBs to go for the rating system; the guideline was revised in 2015. It is to be noted that AMC is the only ULB to have AA stable rating as of now and it was upgraded in 2016.
According to Sebi, green bonds finance is to be used to promote projects in renewable and sustainable energy like wind and solar energy, sustainable water management, clean transportation, biodiversity conservation, etc.
GREEN BOND
A green bond is like any other regular bond but with one key difference, the money raised are earmarked for financing ‘green’ projects that are environment friendly. Such projects could be in the area of renewable energy, clean transportation and sustainable water management.
THE BENEFITS
Green bonds enhances an issuer’s reputation, as it helps in showcasing his commitment towards sustainable development. It also provides the issuer’s access to specific set of global investors who invests only in green ventures.
Source: dnaindia
