VIJAYAWADA: Andhra Pradesh has secured approval for Rs 1,990.83 crore worth of projects under the Urban Challenge Fund (UCF), with the Centre committing Rs 497.71 crore in assistance. The four projects, covering Visakhapatnam and Mangalagiri–Tadepalli, mark a decisive shift towards reform-linked, market-driven financing for urban infrastructure.
The largest share of investment is directed towards Visakhapatnam, which is fast emerging as an economic and industrial hub. The Madhurawada Underground Drainage Project will deliver a 401 km sewer network, 21,800 house service connections, 14,828 manholes, and a 20 MLD sewage treatment plant at Kapuluppada, with SCADA and AI-backed monitoring.
The 24×7 Smart Water Supply Project will convert intermittent supply into continuous pressurised delivery, supported by a 65 MLD treatment plant, 417 km of network, and 37,407 smart AMI connections. The water modernisation project will strengthen GVMC’s revenue base through digital metering, ultrasonic AMI meters, remote valve operation, and web-based SCADA systems.
In Mangalagiri–Tadepalli, the Phase-I UGD project under the Hybrid Annuity Model will provide 303.79 km of sewer lines, 33,842 house connections, six decentralised STPs with 26.68 MLD capacity, pumping stations, and SCADA-enabled monitoring. Officials said this project is critical to managing rapid urbanisation pressures in the Capital Region.
MA&UD Minister Ponguru Narayana said the approval of all four projects under UCF validates Andhra Pradesh’s focused approach to infrastructure-led urban development. “Under the leadership of Chief Minister N Chandrababu Naidu, the Government is moving beyond routine municipal works and creating citizen-centric, financially sustainable infrastructure. Drinking water, drainage, sewage treatment and smart monitoring are the foundations of liveable cities,” he said.
MA&UD Principal Secretary, S Suresh Kumar, added that the UCF approval reflects AP’s readiness in preparing reform-linked, market-finance-backed projects. “The Urban Challenge Fund is not a grant scheme; it is a reform-linked financing platform. It requires ULBs to think in terms of bankable projects, PPP structures, user charge reforms and measurable service outcomes. Andhra Pradesh’s approved projects reflect this approach,” he said.
He noted that GVMC’s IFC-supported UGD project, Canara Bank-backed 24×7 water supply initiative, Indian Overseas Bank-supported bulk water modernisation, and MTMC’s HAM-based sewerage project with HUDCO support are examples of how ULBs can combine Central aid with institutional finance.
He emphasised that the government is preparing a Rs 1,000 crore municipal bond issuance by August 2026, which will boost credit culture of ULBs and create a sustainable platform for financing projects.
GVMC’s proposed green bond pathway will also help channel investments into climate-resilient infrastructure such as sewerage treatment, reuse of treated water, energy-efficient pumping, and reduction of non-revenue water.
Officials confirmed that the next shelf of projects, worth around Rs 15,000 crore, will be aligned with UCF priorities.
The approvals, coupled with the upcoming bond programme and GVMC’s green bond pathway, position AP as an early mover in reform-driven, market-linked, and climate-resilient urban infrastructure financing.