HYDERABAD: The Telangana government has approved a guarantee for a Rs 2,944 crore term loan sanctioned by the Housing and Urban Development Corporation Limited (HUDCO) to the Hyderabad Metropolitan Water Supply and Sewerage Board (HMWSSB).
The loan will fund works under the Godavari Drinking Water Supply Scheme, Phases II and III, and the filling of Osmansagar and Himayatsagar reservoirs as part of efforts to rejuvenate the Musi river.
The government will execute the guarantee deed prescribed by HUDCO. HMWSSB will pay a 2% guarantee commission to the state government as per RBI guidelines.
According to a government order issued on Thursday, the guarantee will be subject to the terms of the loan agreement signed between HMWSSB and HUDCO on January 6, 2026. The Water Board has been directed to comply with all terms and obligations under the agreement.
The project will be implemented under the Hybrid Annuity Model, with the government bearing 40% of the project cost and the agency concerned investing the remaining 60%. The government has advised HMWSSB to raise its 40% share through HUDCO assistance. Loan repayment will be met through budgetary support to HMWSSB.