The Telangana Government has approved a state guarantee for a Rs.2,944 crore HUDCO term loan to the Hyderabad Metropolitan Water Supply and Sewerage Board (HMWSSB). The loan will support the Godavari Drinking Water Supply Scheme, Phases II and III, and the filling of Osmansagar and Himayatsagar reservoirs for the rejuvenation of the Musi River.
The approval was issued through G.O.Rt.No.843 by the Metropolitan Area and Urban Development Department on September 3, 2026. The guarantee covers the loan sanctioned by the Housing and Urban Development Corporation Limited (HUDCO) to HMWSSB under scheme number S362025060300801.
An earlier government order, dated January 25, 2025, granted administrative approval of Rs.7,360 crore for the project under the HAM contract mode. It set out a funding arrangement in which the Government would bear 40% of the project cost and the agency would invest 60%. The Government’s 40% share was recorded as Rs.2,944 crore, with HUDCO loan assistance identified as a possible funding route and repayment to be supported through government budgetary assistance to HMWSSB.
HMWSSB’s Managing Director asked HUDCO to communicate the principal loan sanction. HUDCO’s Regional Chief later sanctioned the Rs.2,944 crore loan. The loan agreement between HMWSSB and HUDCO was executed on January 6, 2026, and required a state guarantee in HUDCO’s prescribed format.
The state guarantee will be governed by the loan agreement. HMWSSB must meet all its terms, conditions, covenants and obligations. The Government will execute the guarantee deed in HUDCO’s prescribed format, and HMWSSB must pay the state a 2% guarantee commission, in line with RBI guidelines.
The order records concurrence from the Finance (DCM) Department through communications dated February 13, 2026, and September 2, 2026. It was issued by order and in the name of the Governor of Telangana, with Jayesh Ranjan, Special Chief Secretary to Government, signing the order. HMWSSB’s Managing Director was directed to take further action.
