Bhubaneswar Expressways Private Limited

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In May 2010, the National Highway Authority of India (NHAI) awarded a 29 year concession (including construction period of 30 months) to a consortium of Valecha Engineering of India and KazStroyService (KSS) Limited of Kazakhstan,for the strengthening, improvement, four-laning, operation and maintenance of 67kms of Bhubaneswar-Puri Section of National Highway-203 (NH-203),from km0 to km59, in the state of Orissa. Under the contract, the consortium was responsible for the design, construction,finance, operation and maintenance and strengthening of the existing carriageway to a four-lane highway with paved shoulders. The scope includes construction of 4lanes including construction of new pavement, rehabilitation of existing pavement,construction and/or rehabilitation of major and minor bridges, culverts, service roads, road intersections,interchanges, drains, etc.The project will have 4 bypasses avoiding catchment areas of Bhubaneshwar, Pipli, Chandanpur and Puri.The expansion project, part of National Highway Development Project Phase - IIIA would ease traffic congestion and give significant stimulus to trade and commerce in the entire region. The consortium of KazStroyService Infrastructure India Private Limited (KSSIIPL-60%) and Valecha Engineering Limited (40%), established Bhubaneswar Expressways Private Limited, a special purpose vehicle, to implement the project. The SPV won the tender through competitive bidding, conducted by NHAI during March-April 2010, by quoting the lowest financial grant from NHAI of US$43.1mn (INR 1937.8mn @ 45INR/USD).Under the contract, the SPV was to recover the capital costs and operating costs including returns through tolling during the term of concession. The project attained financial closure on 12th January 2011.The debt/equity/grant ratio of the project was 45/19/36. The estimated capital cost of the project at the time of financial closure was US$ 120.2mn (INR 5411 mn @ 45 INR/USD) million. Apart from INR 1937.8mn upfront grant from NHAI, financing comprised INR 2440mn 14year term loan, and sponsor equity of INR 1033.2mn. The INR 2440mn term-loan had a grace period of 12months and a repayment schedule of 133monthly instalments.The interest rate for the first year was 11% subject to annual review. The debt was arranged by SBI Capital Markets. The participating banks were Punjab National Bank(700mn), L&T Infrastructure Finance Ltd(600mn),Axis Bank Ltd(600mn), India Infrastructure Finance Co Ltd(540mn). Construction on the project began in January 2011 and was expected to be completed by July 2013.