Indore Municipal Corporation to Raise ₹2.45 Billion Through Green Bonds

The bond proceeds will be used to fund a 60 MW solar project


In probably a first for an urban local body, the Indore Municipal Corporation is floating a green bond on February 10, 2023, to raise ₹2.45 billion (~$29.5 million ) for a 60 MW ground-mounted captive solar photovoltaic project in Khargone district in Madhya Pradesh.

The issue will close on February 14. The tenor of the green municipal bonds will be for 3, 5, 7, and 9 years with a coupon rate of 8.25%.

The bonds will have a base issue size of ₹1.22 billion (~$14.77 million) with a green shoe option of a similar amount.

In the offer document filed with SEBI, the corporation said it had been selected by the Ministry of New and Renewable Energy (MNRE) under the Central Public Sector Undertaking Program Phase II to set up a solar power project of up to 100 MW capacity with viability gap funding support.

The Indore municipality has identified 210.84 acres of land to set up the solar project.

Last September, the municipality invited bids to appoint an engineering, procurement, and construction contractor for the ₹2.87 billion (~$34.68 million) project.

The municipal body said the project would enable it to reduce dependency on grid energy and reduce its carbon footprint. The project is also registered under Verified Carbon Standard Association, which manages the voluntary carbon markets program, to avail benefits of carbon credits.

Several urban local bodies have taken initiatives to adopt renewable energy in recent years. In 2021, the Municipal Corporation of Greater Mumbai approved the setting up of a hybrid 20 MW hydroelectric and an 80 MW floating solar project on the Middle Vaitarna Dam, which supplies water to the metropolis. Last year, the Bhopal Municipal Corporation invited bids to set up a 21 MW solar project for captive use.

Recently, the government of India auctioned sovereign green bonds worth ₹80 billion ($966.90 million) as part of a two-tranche ₹160 billion (~$1.93 billion)) bond sale. The second tranche will go for up auction on February 9.

The government has said the bond proceeds would fund ‘green’ projects in the public sector, reducing the economy’s carbon intensity.

A ‘green’ project is defined as one which encourages energy efficiency in resource utilization, reduces carbon emissions and greenhouse gases, promotes climate resilience and adaptation, and improves natural ecosystems and biodiversity in accordance with Sustainable Development Goals principles.