Ashoka Cuttack Angul Tollway Limited

cancelled

In November 2011, the National Highway Authority of India (NHAI) awarded a 23 year concession (including construction period of 30 months) to Ashoka Buildcon Limited for the strengthening, improvement, 4-laning, operation and maintenance, and tolling of 112kms of Cuttack-Angul Section of NH-42 from Km 0.000 to Km 112.000, in the State of Orissa. Under the contract, Ashoka Buildcon was responsible for the design, construction, finance, operation and maintenance and widening of the existing 2-lane highway to a 4-lane highway with paved shoulders. 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 National Highway Development Project Phase-III would ease traffic congestion and give significant stimulus to trade and commerce in the entire region. This stretch passed through south of NH6 in the mining and metals belt of Orissa and was expected to tap the commercial traffic. Ashoka Buildcon Limited established Ashoka Cuttack Angul Tollway Limited, a special purpose vehicle, to implement the project. The SPV won the tender through competitive bidding, conducted by NHAI, by quoting the highest premium payment to NHAI. The SPV would pay NHAI a sum of of US$12.2mn (INR 610.9mn @50 INR/USD) as premium in the first year of operations with 5% increase in each subsequent year (this amounted to an NPV payout of US$ 165.2mn over a concession period of 23years at a discount rate of 10%). There were 27 pre-qualified bidders out of which 16 offered their final bids. The L2 bidder, NCC Infra, had quoted a premium payment of INR 512mn. Under the contract, the SPV was to recover the capital costs and operating costs including returns through tolling during the term of concession. The tolls would be escalated annually at the rate of 3% plus 40% of the CPI (Consumer Price Index). The concession agreement was signed on 14th March 2012. The project attained financial closure in August 2012. The debt equity ratio of the project was 71:29. The estimated capital cost of the project at the time of financial closure was US$ 224.7mn (INR 11236.9mn @ 50 INR/USD). Financing comprised term loan of US$160.2mn (INR 8010mn), and sponsor equity of US$ 64.5mn (INR 3226.9mn).The loan was priced at an interest rate of 12.5%. The debt was arranged by Axis Bank Limited. Construction on the project was expected to be completed by October 2014. NHAI was still to announce the date of commencement of the concession period (appointed date) for the project, after which Ashoka Cuttack Angul Tollway would start construction work. The project was yet to receive environment clearance and land acquisition status stood around 47% as on August 2012. In April 2013, Ashoka Buildcon had approached the NHAI expressing its intention to exit the Cuttack-Angul highway project. The reasons mentioned were delay in land acquisition and getting environmental clearance for the project. Finally in July 2014, NHAI canceled the concession for the project.