Telangana approves ₹2,944 crore HUDCO loan for water projects

The Telangana government has approved a state guarantee for a ₹2,944 crore loan from the Housing and Urban Development Corporation Limited (HUDCO) to the Hyderabad Metropolitan Water Supply and Sewerage Board (HMWSSB).

The funds are designated to support the Godavari Drinking Water Supply Scheme (Phases II and III) and the rejuvenation of the Musi River through the filling of the Osmansagar and Himayatsagar reservoirs. This loan represents the state's 40% share of a larger ₹7,360 crore project, with the remaining 60% to be invested by a private agency under a Hybrid Annuity Model (HAM) contract.

Following negotiations, HUDCO reduced the annual interest rate from 8.97% to 8.85%. In a related move, the Telangana government has waived the standard 2% guarantee commission typically applied to state-backed loans, citing the public importance of water supply and river restoration works. The state will provide budgetary assistance to support both principal and interest payments.