BBMP plans to borrow Rs 39,000 crore to fund mega infra projects

Bengaluru: Rs 39,000 crore — that’s the amount Bengaluru’s civic body plans to borrow as it prepares to undertake mega infrastructure projects such as tunnel roads, 17 elevated corridors, double-decker flyovers and a sky deck. 

The Bruhat Bengaluru Mahanagara Palike (BBMP) hopes to borrow funds mainly from domestic financial institutions and wants the state government to stand guarantee for the loans. 

The approach is similar to how Namma Metro funds its expansion. 

In a recent letter to the Urban Development Department (UDD), BBMP Chief Commissioner Tushar Girinath outlined projects totaling Rs 59,000 crore. 

"Over the next 10 years, Bengaluru must invest Rs 1 lakh crore in infrastructure to sustain the influx of population. We have proposed a few large projects primarily to address traffic congestion," he said. 

Girinath is learnt to have requested financial assistance for loan repayment as well as consent for the government to stand guarantee for the borrowings. 

Among the four projects, the construction of 43-km tunnel roads alone is estimated to cost Rs 36,000 crore. Of this, the civic body plans to raise about Rs 16,000 crore and use innovative financing models to cover the remaining cost. There is also a plan to levy toll. 

Building 17 elevated corridors spanning 100 km and double-decker flyovers along new metro lines is also a part of the BBMP’s proposal to the government. 

According to a BBMP official, the state government allocates approximately Rs 3,000 crore annually to the BBMP for major works. "We have requested an additional allocation of Rs 2,000 crore per year over the next four years to fund four projects, including the sky deck," he added. 

Sources indicated that the BBMP has promised to partially share the loan repayment burden of Rs 3,000 crore per year by implementing the premium Floor Area Ratio (FAR) policy and the new advertisement policy. 

With the government and the BBMP covering Rs 20,000 crore over the next four years, the civic body will need to rely on external sources to fund the remainder. 

Notably, borrowings from financial institutions will be a first for the BBMP, which largely depends on government support and its own internal resources to fund infrastructure projects. 

A senior official recalled that the BBMP had raised Rs 250 crore through bonds in 1999-2000 and hadn't repeated anything like that since.

"At first glance, the investment in these four projects may seem substantial, but it is worth it. For instance, the Peripheral Ring Road was estimated to cost Rs 3,500 crore in 2006 but the cost has now shot up to Rs 27,000 crore as the project has dragged on for decades,” he said.