Bangalore Elevated Tollway Limited

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In January 2006, National Highways Authority of India (NHAI) signed a 20 year concession agreement with Bangalore Elevated Tollway Limited (BETL) to build a 9.98 km four lane elevated expressway connecting Silk Board Junction in Banglaore city with Electronics City, an industrial park in the suburbs of Bangalore city, on build-own-transer (BOT) basis. The scope of the project included six laning of the existing four lane ground level stretch on National Highway seven (NH-7) between Bangalore and Hosur (Tamil Nadu State), construction of two lane service road on both sides of Bangalore-Hosur section of NH-7 to cater to slow moving traffic and four new underpasses for pedestrians. The concession term included the construction period of 30 months. The Bangalore-Hosur corridor, one of the busiest sections in India, catered to more than100,000 vehicles driving in and out of Bangalore city towards Electronics city, Hosur and other parts of Tamil Nadu and Kerala daily. This corridor was considered one of India’s top priorities for road expansion as the manufacturing and service industries in the vicinity contributed significantly to the national economy annually. Once operational, the new highway was expected to significantly ease traffic congestion and drastically reduce travel time. This would enable thousands of IT professionals to commute to work faster and easier. BETL was equally owned by three Indian firms namely: Soma Enterprise Limited, Nagarjuna Construction Company Limited and Maytas Infrastructure Limited. Soma consortium won the concession in an international competitive tender, conducted by NHAI, by offering to make an upfront payment of US$ 3.5 million for the right to collect tolls during the term of the concession. Other bidders that participated in the tender included Larsen & Toubro Limited, GMR Group, Gammon India, and HCC. India’s highway development policy allowed ‘viability funding’ by NHAI to the tune of 40 percent of the capital costs as grant to the concessionaire, subject to competitive bidding. However, in high traffic density corridors like this one that are very profitable, the bidders usually offered an upfront payment to NHAI instead of seeking a grant. The total capital cost of the project was estimated at US$ 168.8 million, including the upfront payment to NHAI. The project reached financial closure in November 2006. The debt of US$ 132 million was arranged by a consortium of local banks led by Canara Bank. Construction work on the project began in March 2006 and was expected to be completed by September 2008.