Marking a significant milestone for urban development in India, International Finance Corporation (IFC), a member of the World Bank Group, announced a landmark commitment of up to $60 million (Rs 498 crore) in Rupee-denominated Non-Convertible Debentures (NCDs) to the Greater Visakhapatnam Municipal Corporation (GVMC).
As per an official release from the state government this is the first-ever direct municipal financing by IFC in India, and also the first instance of a development finance institution extending investment to an Indian city without a sovereign guarantee.
To this effect, a formal agreement was signed today at the Andhra Pradesh Secretariat between IFC and GVMC, marking a path-breaking development in India’s municipal finance landscape.
The government stated that this development signals a new era of municipal creditworthiness, showcasing how financially disciplined and progressive urban local bodies (ULBs) can attract global capital for critical infrastructure projects.
For an Efficient Sewerage System
The investment is directed towards the Madhurawada Sewerage System Project, which aims to revolutionize sanitation infrastructure in one of Visakhapatnam’s most rapidly urbanizing regions.
“This collaboration with IFC is a transformative step not just for Visakhapatnam but for urban India as a whole. It signals to the world that Indian cities, when financially disciplined and administratively progressive, can attract global investments without sovereign guarantees.
The Madhurawada project is more than a sewerage system—it represents a forward-looking model of sustainable urban growth, resilience, and self-reliance.
Our vision is to create a city that is not only cleaner and healthier but also sets a precedent for other cities aspiring to modernize with global standards of financing and governance” said Mr S. Suresh Kumar, IAS, Principal Secretary to Government, Municipal Administration & Urban Development Department.
Similarly, Mr Makhtar Diop, Managing Director of IFC, said: “Our partnership with Visakhapatnam shows how municipalities can mobilize private capital to deliver essential services affordably and sustainably—from wastewater and sanitation to transport and solid waste management—without sovereign guarantees.
This first-of-its-kind municipal financing will help protect the city’s coastline, create jobs, and set a new benchmark for resilient, low-carbon growth.
It is testament to the World Bank Group’s commitment to help cities leverage limited public funds to attract global private investment. What India is pioneering today can inspire cities everywhere to build cleaner, more resilient, and future-ready urban spaces.”
About the Project
The project is said to establish a modern, climate-resilient sewerage system that includes: Underground Sewer Network, Pumping and Lift Stations, Wastewater Treatment Plant (WWTP), Reuse & Recycling Options, Capacity Planning to handle present demand plus projected population growth for at least 30 years, ensuring long-term sustainability.
Expected Benefits
The project is expected to bring in benefits which include elimination of raw sewage discharge that will drastically reduce the incidence of diarrheal diseases, malaria, dengue, and other waterborne illnesses.
Thereby giving cleaner living environments and improving life expectancy.
In addition, Pollution of natural drains, groundwater, and nearby coastal waters will be significantly reduced while treated wastewater reuse will conserve freshwater sources and support urban water security.
Financing Pattern
The project has a sanctioned cost of Rs 553 crore, structured as follows IFC Loan (NCDs): Rs 498.00 Crores (15-year tenure, floating interest rate of 8.15% p.a.), AMRUT 2.0 Assistance: Rs 45.64 Crores (Central Government scheme), GVMC Contribution: Rs 9.36 Crores (internal accruals)
As per the release GVMC is solely responsible for repayment, with no sovereign guarantee and no State Government budgetary support.
Loan Tenure
The tenure of the loan is 15 years including a 3-year moratorium on principal payment and 12 years of repayments, with an interest rate of 8.15% per annum floating interest rate, ensuring manageable long-term financing aligned with GVMC’s revenue flows.
“This is a defining moment for Visakhapatnam. By partnering with IFC, we are addressing one of the most critical challenges of urbanization—sanitation—in a way that is financially sustainable and environmentally responsible.
GVMC is proud to be the first city in India to access global development finance directly, proving that municipal bodies can be trusted, creditworthy partners in shaping the future of urban India” said Mr Mr Ketan Garg, Commissioner, GVMC.
