Gangotri Sarangpur Shujalpur Tollway Private Limited

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On 30th July 2011, Madhya Pradesh Road Development Corporation (MPRDC) signed a 30-year concession (including construction period of 2 years) with Gangotri Enterprises Limited for the strengthening, improvement, two-laning,operation and maintenance, and tolling of 38.46kms of Sarangpur-Akodia-Shujalpur section of State Highway-41 from km 0/000 (at Shujalpur) to km 38/600 (at Sarangpur), in the state of Madhya Pradesh. Under the contract, Gangotri Enterprises was responsible for the design, construction, finance, operation and maintenance,strengthening and widening the existing carriageway to 2-lane road. 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 MPRDC Highway Development Program, was expected to ease traffic congestion and give significant stimulus to trade and commerce in the entire region. Gangotri Enterprises Limited established Gangotri Sarangpur Shujalpur Tollway Private Limited, a special purpose vehicle, to implement the project. The SPV won the tender through international competitive bidding, conducted by MPRDC, by requesting for the lowest upfront subsidy (viability gap funding) of US$ 5.3mn (INR 267mn @50 INR/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 13th February 2012. The grant/debt/equity ratio of the project was 46/34/19. The estimated capital cost of the project at the time of financial closure was US$ 11.6mn (INR 580mn @50 INR/USD). Apart from viability gap funding (grant) of INR 267mn (Central Government - INR 100mn, and Govt of Madhya Pradesh - INR 167mn), financing comprised of 14-year 2-months term loan of US$ 4mn (INR 200mn) and sponsor equity of US$ 2.3mn (INR 113mn). The term loan had a repayment schedule of 50 quarterly installments. The debt was arranged by Central Bank of India. Construction for the project began in February 2012 (Appointed Date) and was expected to be completed by February 2014. 95 percent of the total land requirement had been handed over to the concessionaire.