ACP Tollways Private Limited

active

On 15th November 2011, Uttar Pradesh State Highway Authority (UPSHA) awarded a 20-year concession (including construction period of 900 days) with a consortium of Apco Infratech Limited (AIL), Chetak Enterprises Limited (CEL), and Patel Engineering Limited (PEL) for the strengthening, improvement, 4/6-laning, operation and maintenance, and tolling of 115kms of of the existing Varanasi-Shaktinagar road from Narayanpur to Hathinala section of SH-05A,in the state of Uttar Pradesh.The project road passes through districts of Mirzapur and Sonebhadra. Under the contract, the consortium was responsible for the design, construction, finance, operation and maintenance,strengthening and widening the existing carriageway to 2-lane road. The scope included construction of new pavement, rehabilitation of existing pavement, construction and/or rehabilitation of major and minor bridges, culverts, road intersections, interchanges, drains, etc.The expansion project, part of the UPSHA Highway Development Program, was expected to ease traffic congestion and give significant stimulus to trade and commerce in the entire region. The project road was on the connecting link between two National Highways – NH7 and NH75E. The project corridor passed through one of the most industrially active areas of the country and had presence of numerous power plants, coal fields, limestone quarries, cement and chemical factories. The consortium of Apco Infratech Limited (35%),Chetak Enterprises Limited (33%),and Patel Engineering Limited (32%),established ACP Tollways Private Limited (ATPL), a special purpose vehicle, to implement the project. The SPV won the tender through international competitive bidding, conducted by UPSHA, by requesting the lowest upfront subsidy (viability gap funding) of US$ 48.4million (INR 2419.2mn @50 INR/USD). Under the contract, the SPV was to recover the capital costs and operating costs including returns through tolling during the term of concession. Apco Infratech would execute the EPC for the project. The project had earlier been bid out twice. During the first round of bidding, a single bid was received, and hence, rejected; and a second round of bidding was undertaken wherein no bids were received. The main reasons cited for inadequate response was that there were local interests group who were unwilling to pay toll for the stretch and also the traffic volume comprised of lower levels of commercial traffic. Adequate changes were subsequently made to the final tender document. The concession agreement for the project was signed on 8th December 2011. The project attained financial closure on 2nd June 2012. The grant/debt/equity ratio of the project was 14/71/15. The estimated capital cost of the project at the time of financial closure was US$ 351.5mn (INR 17573.9mn @50 INR/USD). Apart from the upfront grant of INR 2419.2mn, financing comprised of 15-year term loan of US$ 250mn (INR 12500mn) and sponsor equity of US$ 53.1mn (INR 2654.7mn). The term loan had a grace period of 6 years and a repayment schedule of 49 quarterly instalments. The lead arranger for the term loan was Punjab national Bank (INR3500mn). The other participating banks were Vijaya Bank (INR750mn), Oriental Bank of Commerce (INR1000mn), Corporation Bank (INR1000mn), Central Bank of India (INR1000mn), Bank of India (INR1350mn), Dena Bank(INR1500mn), India Infrastructure Finance Co Ltd (INR2400mn). Other financing instruments included a 15-year INR 5050mn Letter of Credit Facility, and a 1.5-year Guarantee facility of INR 600mn. Construction on the project was expected to begin in June 2012 (Appointed Date) and was expected to be completed by November 2014. The appointed date (handing over of 90% of the project land requirement to the concessionaire), however, was yet to be announced (June 2012 was based on assumption of lenders for the loan agreement) as the general approval of design from railway authority was pending. The Right of Way (RoW) for 95% of the