Vellakovil City Development Plan - Municipal

More documents

Recommendations

Info

City Development Plan for Vellakoil Municipality SMEC India Pvt Ltd Final Report TNUDP III 8.7 IMPACT OF POTENTIAL IMPROVEMENTS Vellakoil’s ability to improve on its financial performance hinges primarily on its ability to sustain and improve on the revenue growth noticeable in recent years. Specific interventions with respect to revenue realization and cost management are detailed in chapter 6 of the report. On ‘Full Project Investment Scenario’ basis, Vellakoil’s own revenues (comprising taxes, user charges and other income) could grow from Rs. 158 lacs in FY 2006-07 to Rs. 1302 lacs by FY 2028-29, implying an absolute growth of 36%. Vellakoil has vast potential for increasing its own income given the growth achieved in the last few years. Areas for revenue enhancement in own revenue include : Property Tax – through an enhanced revision in ARV, widening assessee base and closer scrutiny. Besides periodic increase (every 5 years) in property tax rates. Professional Tax – sustaining a higher assessment growth. User Charges – periodic increases in user charges for water connections and sewerage connections. The Municipality could generate additional Rs. 910 lacs (exclusive of Deposits) of income per annum by FY 2028-29 by providing water connections to 80% of property tax assessments and sewerage connections to 70% of property tax assessments. Vellakoil also needs to explore scope for private sector participation for development of remunerative projects and city beautification projects that have been identified by Vellakoil. While there is potential for expenditure control in certain areas (as in the case of energy costs and leakage in water supply), the focus of cost management should be to shift expenditure from administration to better asset management and service levels. We have not factored in any cost reduction in the FOP and have assumed that any savings generated from cost reduction would go into augmenting service levels and better asset management. A comprehensive energy audit is required, given that 60% of its operations and maintenance expenditure is spent on electricity charges. Plugging leakage in the water supply network and installation of timers and energy savers on the street light network are important interventions needed in the context of Vellakoil’s high power costs. 8.8 ESTIMATION OF INVESTMENT CAPACITY 8.8.1 Scenario I – Estimation of Investment Capacity on as is where basis We carried out the exercise of arriving at the Investment and Borrowing Capacity on as is where basis without any financial reforms being carried out. The borrowing capacity has been arrived by taking the NPV over the next 20 years on the minimum of the following : 30% of revenue projections Primary Operating Surplus (Surplus before Interest & Depreciation) The investment capacity has been arrived @ of 4 times the borrowing capacity assuming that loans constitute 25% of total investment requirement. In such a scenario, the Investment and Borrowing Capacity works out as below : 81
City Development Plan for Vellakoil Municipality SMEC India Pvt Ltd Final Report TNUDP III Table8.23 Summary of Borrowing and Investment Capacity – Scenario I Borrowing Capacity Rs. 373.26 lacs Investment Capacity (BC x 4 times) Rs. 1493.02 lacs 8.8.2 Scenario II - Estimation of Investment Capacity with Projects & Growth Rate of 7.5% for Devolution Funds In Scenario II, the financial projections have been worked out for the next 30 years assuming that the income from Devolution Funds would grow @ 7.5% p.a. But the financial projections for the next 20 years have been taken to arrive at the Borrowing & Investment capacity. The borrowing capacity of Vellakoil Municipality has been arrived on the minimum of the following : 30% of revenue projections 50% of Primary Operating Surplus less Debt Service The overall financing mix has been arrived to include 18% Loans, 63% Grants and 19% own funds. The repayment period of loans has been taken at 5+15 years for Sewerage and Water Supply Loans and 2+8 years for other project loans. The above factors have been taken in to account for arriving at the Annuity Factor, which has been applied on the lowest of the above to arrive at the overall borrowing capacity and investment capacity. Table8.24 Summary of Borrowing and Investment Capacity – Scenario II Borrowing Capacity Rs. 744.13 lacs Investment Capacity (BC/0.14) Rs. 4134.08 lacs Investment Requirement Rs. 9018.12 lacs Sustainable Investment Capacity % - IC / IR 46% Thus the sustainable investment capacity works out to 46% in case the growth in Devolution Funds is taken @ 7.5% p.a. 8.8.3 Scenario III - Estimation of Investment Capacity with Projects & Growth Rate of 10% for Devolution Funds In Scenario III, the financial projections have been worked out for the next 30 years assuming that the income from Devolution Funds would grow @ 10% p.a. But the financial projections for the next 20 years have been taken to arrive at the Borrowing & Investment capacity. The borrowing capacity of Vellakoil Municipality has been arrived on the minimum of the following : 30% of revenue projections 50% of Primary Operating Surplus less Debt Service The overall financing mix has been arrived to include 18% Loans, 63% Grants and 19% own funds. The repayment period of loans has been taken at 5+15 years for Sewerage and Water Supply Loans and 2+8 years for other project loans. The above factors have been taken in to account for arriving at the Annuity Factor, which has been applied on the lowest of the above to arrive at the overall borrowing capacity and investment capacity. 82
Page 1 and 2:
Submitted to CITY DEVELOPMENT PLAN
Page 6 and 7:
Final Report City Development Plan
Page 8 and 9:
Final Report City Development Plan
Page 10 and 11:
Abbreviation and Acronyms ANM : Aux
Page 12 and 13:
EXECUTIVE SUMMARY COUNCIL RESOLUTIO
Page 14 and 15:
TABLES 2.1 Population and growth 4
Page 16 and 17:
City Development Plan for Vellakoil
Page 18 and 19:
Page 20 and 21:
Page 22 and 23:
Page 24 and 25:
Page 26 and 27:
Page 28 and 29:
Page 30 and 31:
Page 32 and 33:
Page 34 and 35:
Page 36 and 37:
Page 38 and 39:
Page 40 and 41:
Page 42 and 43:
Page 44 and 45: City Development Plan for Vellakoil
Page 94: City Development Plan for Vellakoil
Page 103: City Development Plan for Vellakoil
show all

Vellakovil City Development Plan - Municipal

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?