4.1 Structured Framework for Urban Infrastructure Development: A Need in Odisha:

(i) According to Census 2011, Odisha continues to be among the least urbanized States in India with an urban share of population of about 17%; only 3 States, namely, Assam, Bihar and Himachal Pradesh had lower urbanization levels compared to Odisha. However, the pace of urbanization in Odisha continues to intensify due to consistently good economic performance, which is double the national growth as reflected in the following:

Urban population grew at 26.8% during 2001-11 which is double the national growth vis-Ã -vis rural population growth of 11.7% during the same period.
The number of towns increased from 138 in 2001 to 223 in 2011 (largely due to increase in Census Towns from 31 to 116, even though Statutory Towns remained at 107). 2007-08) which is expected to sustain in view of the state's healthy investment pipeline.
This continued economic growth is expected to hasten urbanization as is evident from the trends in population growth during 1991-2011.
Budgetary outlay of HUDD has increased at a Compounded Annual Growth Rate (CAGR) of 34% during the 2005-10. Also, the share of plan outlay in HUDD budget increased from 20% in 2005-06 to 50% in 2009-10.

(ii) Odisha has 103 Urban Local Bodies (ULBs) across three categories namely, 3 Municipal Corporations, 37 Municipalities and 53 Notified Area Councils (NACs). The legal framework for the urban sector is provided by the Odisha Municipal Corporations Act, 2003 (that applies to Bhubaneswar and Cuttack Municipal Corporations) and the Odisha Municipal Act, 1950 (that applies to the Municipalities and the NACs).

(iii) Thus last decade has witnessed a steep growth in urban population. Rapid urbanization has post huge challenges and created opportunities for infrastructure development, housing, slum development, water supply, sanitation, transport, environment and livelihood for the urban poor. Keeping in view the rapid urbanisation process in Odisha the State Government has putting maximum emphasis on planned growth of its cities with adequate infrastructure and basic amenities. This is provided through the Urban Local Bodies and Parastatal Agencies. Further concrete major are initiated for efficient management and delivery of civics services like provision of affordable housing, safe drinking water, sanitation including solid waste management, storm water drainage, roads and public transport while creating livelihood opportunities by accelerating economic growth of cities, towns and building capacity of the urban poor.

(iv) However, "Municipal Finances" are weak. Capital investments continue to rely on GoO's budgetary outlays and grants. Debt financing is limited to State supported projects and constrained by inadequate capacity to develop bankable projects.

Finances of ULBs continue to be stressed leaving little surplus for investment. Urban Local Bodies face severe constraints - both financial and organizational - to be able to
i) Put in place processes for planning and delivering their functions,
ii) Identify/implement projects to improve service delivery, and
iii) Manage/improve their finances.
Even though the municipal legal framework allows flexibility to access loans at the ULB level, debt financing of urban projects is limited to multi-lateral and bi-lateral financing.

5. Duties Performed:

Concessional Funding of Urban Infrastructure Projects with positive environmental impact using a line of credit of KfW.
To contribute towards improvement of environment protection and preservation of natural resources and living conditions of urban population of Odisha.
To provide project development support and capacity building to Urban Local Bodies (ULBs), Development Authorities, Regional Improvement Trusts, Special Planning Authorities, Odisha State Housing Board, and Statutory Boards in order to enable them to develop well-structured and bankable projects.
The ultimate goal is to perform sustainable intermediation role linking capital markets and ULBs.
To progressively increase the external financing of ULB level capital projects in a sustainable manner without State Guarantee.
Catalyzing development of well structured bankable projects.
Facilitating / incentivizing & ULB Level reforms that can be pre-cursors for further investment flows.
For Systematic Development and financing of Urban Infrastructure projects in the state of Odisha primarily with the active involvement/ participation of ULBs, Development Authorities, Statutory Boards & Public Sector Undertakings.

5. Main Activities/ Functions & 6. Details of Services Rendered:

(a) The Institutional Framework of OUIDF consist of an Urban Loan Fund (the "Loan Fund") a Grant Fund (the "Grant

Fund") and Project Development Fund (the "PDF").

The Loan Fund shall be set up with participation of the Private Sector.

The Grant Fund shall support sub-projects with viability gap funding wherever necessary.

The PDF shall provide project development support and capacity building to ULBs in order to enable them developing well-structured bankable projects.

The ultimate goal of the OUIDF is to perform a sustainable intermediation role linking capital markets and ULBs. A Project Development Agency will be set up to manage the Funds. The Loan Fund will have the objective of providing loans to eco-friendly infrastructure sub-projects, viz. water supply and sewerage projects in a non- guarantee mode. It shall also set a focus on promoting, developing and financing urban PPP Projects.

The Preferred Bidder selected under this bid process would set up a Project Development Agency (PDA) that would be responsible for development, appraisal, financing and monitoring of urban infrastructure projects in Odisha. The PDA would manage three Funds under the OUIDF Trust as described below:

(i) Urban Loan Fund (ULF): An Urban Loan Fund (ULF) has been set up to provide loans to urban projects on a non- guaranteed mode. GoO will bring in equity contribution equivalent to 5 Million Euro into the ULF. A Line of Credit equivalent to 25 Million Euro will be made available by GoO to ULF for on-lending to Urban Projects. The PDA would have responsibility for identification, development, appraisal, sanction, disbursement and repayment of loans under the ULF, in accordance with the guidelines developed and approved by the Board of Trustees of OUIDF.

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