Indore Raises ₹720 Crore in Green Bonds to Power India’s Largest Solar Project for Sustainable Water Supply

Indore, 14 February 2023 – In a landmark move for urban sustainability and climate-conscious financing, the Indore Municipal Corporation (IMC) successfully raised ₹720 crore through its inaugural sale of green bonds—far exceeding its initial target of ₹244 crore. The bonds witnessed an oversubscription of nearly 6 times, underscoring robust public trust and investor confidence. ThePrint+1

Project Overview: A Green Power Solution for Water Supply

The funds will enable the establishment and operation of a 60-megawatt solar power plant in Khargone district’s Samraj and Ashukhedi villages. This will be the largest solar facility dedicated to pumping and supplying water from the Narmada, reinforcing Indore’s commitment to green infrastructure and resource efficiency. ThePrint

Why the Bonds Captured Public Imagination

Several key factors contributed to the overwhelming response:

• First-of-its-kind initiative: IMC became the first city municipal corporation in India to issue green bonds. ThePrint

• A sustainable, cost-saving project: Solar power is poised to reduce recurring expenses in water distribution. ThePrint

• Strategic timing and fiscal climate: Bond issuance immediately followed the budget announcement, wherein municipal green financing received heightened attention. ThePrint

Financing Structure & Support

• The solar project, valued at ₹305 crore, is being supported through subsidies—₹42 crore from the Ministry of New and Renewable Energy via viability gap funding, and ₹20 crore under AMRUT 2.0, which incentivizes green municipal bond issuance by offering ₹10 crore per ₹100 crore raised. ThePrint

• Bonds were structured as Non-Convertible Debentures (NCDs) with an AA+ credit rating—a significant upgrade from the AA rating in 2018—carrying an interest rate of 8.25% per annum, paid semi-annually. Maturities range from three to nine years, and bonds were issued in chunks of ₹1,000, broken into four STRPPs of ₹250 each. ThePrint

A Roadmap for Sustainable City Development

“The solar power project is going to be funded, but more importantly, this is going to pave the way for more such green projects and explore innovative financing methods,” said IMC Commissioner Pratibha Pal, spotlighting the city’s aspiration to blend fiscal prudence with environmental responsibility. ThePrint

What This Means for Indore

1. Sustainability Leadership: Through this pioneering initiative, Indore continues to lead nationally in sustainable public infrastructure.

2. Fiscal Innovation: Green bonds showcase how municipal bodies can leverage capital markets to fund large-scale eco-friendly projects.

3. Public Trust & Engagement: Oversubscription reflects high credibility of IMC among citizens and investors—a boon for future projects.

4. Scalable Model: This project can serve as a blueprint for other cities seeking to finance green infrastructure responsibly.

Indore’s journey from being the nation’s cleanest city to becoming a trailblazer in green municipal finance exemplifies how visionary leadership, public trust, and strategic use of financial tools can converge to shape a truly sustainable urban future.