Chilkaluripet – Vijayawada NH - 5

active

In June 2008, the National Highway Authority of India (NHAI) signed a 15 year concession (30 month of construction period) with a consortium formed by Malaysia’s IJM Corporation Berhard and India’s Infrastructure Development Finance Company (IDFC) to widen and strengthen the 82.5 km section on National Highway (NH-5) between Chilkaluripet and Vijayawada in the state of Andhra Pradesh. Under the contract, the consortium was responsible for the design, construction, finance, operation and maintenance and widening of the existing four lane highway to a six-lane highway with paved shoulders. The expansion project, part of National Highway Development Project Phase V, was expected to ease traffic congestion and give significant stimulus to trade and commerce in the entire region. The consortium established Vijayawada Tollway Pvt. Ltd., a special purpose vehicle, to implement the project. The consortium won the tender through international competitive bidding, conducted by NHAI (in November 2006), by quoting the earliest time for starting the annual premium payment (1698 days or approximately 4.5 years from Appointed Date). Revenue share would increase from 2% in the first year of annual payment (4.5 years from appointed date) to 12% at the end of the 15-year concession periodUnder the contract, Vijayawada Tollway Pvt. Ltd. was to recover the capital costs and operating costs including returns through tolling during the term of concession. The project company secure financing in March 2009 with several Indian banks joining sole book runner SBI Caps. The capital cost of the project at financial closure was estimated at US$ 207 million. The debt equity ratio was 2.7:1 or 73/27. The project was funded by a Rupee Term Loan of US$ 147 million and Promoters Equity Contribution of US$ 60 million. The loan came at an all-in interest rate of 12.75% and would have an average life of 13.5 years. The concession agreement was signed in June 2008. Construction on the project began in June 2008 and was expected to be completed by December 2010.