Andhra Pradesh plans Rs51,000 crore capex in 1st phase of Amaravati project

Mumbai: The Andhra Pradesh government plans to incur a capital expenditure of Rs51,208 crore on the first phase of development of its capital city Amaravati, senior state government officials said on Thursday.

The officials, including Andhra Pradesh Planning Board vice-chairman C. Kutumba Rao, were in the country’s financial capital to invite participation from top financial institutions in its Rs2,000 crore unsecured bond issue, backed by the state government.

The issue is proposed with a tenor of 10 years and is rated AA- by Brickworks Ratings India Pvt. Ltd and Smera Ratings Ltd.

The state government, through the Andhra Pradesh Capital Region Development Authority (APCRDA), has already received funding of close to Rs27,000 crore from the World Bank and the Housing and Urban Development Corporation Ltd (HUDCO), with 48% of capex planned in phase 1 already under execution.

With SBI Capital as advisors, the APCRDA also plans to raise Rs5,000 crore through masala bonds.

In the first phase, which is scheduled to be completed by 2020, the largest chunk of Rs14,554 crore is to be spent on road construction with about less than half the distance of 1,604km under tender or construction.

The ambitious Amaravati project, based on the concept of “tactical urbanism”, has raised concerns on fiscal prudence and ecology, since over 38,000 acres of agricultural land has been pooled by the state government to build its capital city.

Further, the government aims to monetise close to 25% of the pooled land (around 10,000 acres) over a 20-30 year period to raise over Rs50,000 crore to cover its interest and debt payments.

Founded in 2015 after the creation of Telangana, Amaravati aims to house 3.5 million people and is scheduled to be completed by 2029.