Barwa Adda Expressway Limited

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In April 2013, National Highway Authority of India (NHAI) awarded a 20-year concession (including construction period of 910 days) to IL&FS Transportation Networks Limited (ITNL), for the strengthening, improvement,6-laning,operation and maintenance, and tolling of 122.9kms connecting Barwa Adda in Dhanbad district of Jharkhand to Panagarh in Bardhman district of West Bengal including Panagarh Bypass, from Km.398.24 to Km.521.12 of National Highway-2, in the states of Jharkhand (43Kms) and West Bengal (79.88kms). Under the contract, ITNL was responsible for the design,construction,finance, operation and maintenance,strengthening and widening the existing 4-lane carriageway to 6-lane divided carriageway.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 National Highway Development Program (NHDP-V), was expected to ease traffic congestion and give significant stimulus to trade and commerce in the entire region. ITNL established Barwa Adda Expressway Limited (BAEL),a special purpose vehicle on 23rd April 2013, to implement the project. The SPV won the tender through international competitive bidding, conducted by NHAI, by quoting the highest annual premium. BAEL would pay to NHAI a sum of US$ 7.2mn (INR 420mn) in the first year of operations, with 5% increase in each subsequent year (this amounts to an NPV payout of about US$ 87.8mn over the concession period of 20 years at a discount rate of 10%).Under the contract, the SPV was to recover the capital costs and operating costs including returns through tolling, during the term of concession. The NHAI, in November 2009, had put the Barwa Adda-Panagarh 6-laning project on the block. DSL Ltd was awarded the work order in May 2011. However, the contract was terminated in August 2012 as BAEL failed to achieve financial closure. The concession agreement was signed on 8th May 2013. The project attained financial closure in November 2013. The debt equity ratio of the project was 70/30. The estimated capital cost of the project at the time of financial closure was US$ 415.5mn (INR 24349mn @58.6INR/USD). Financing comprised a term loan of US$ 290.1mn (INR 17000mn) and sponsor equity of US$ 125.4mn (INR 7349mn). Providers for the debt are IndusInd Bank and IL&FS Financial Services. The project construction started in April 2014 (Appointed Date) and was expected to be completed by September 2016.