Gujarat Maharashtra Border NH Road

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In May 2009, the National Highway Authority of India (NHAI) signed a 19 year concession (including construction period of 30 months) with a consortium of India's Soma Enterprise Ltd and Spain's Isolux Corsan for widening the 133-km Gujarat/Maharashtra Border-Surat-Hazira Port NH section in the state of Gujarat. 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 - III, was expected to ease traffic congestion, improve port connectivity and give significant stimulus to trade and commerce in the entire region. The consortium of Soma Enterprise of India and Isolux Corsan of Spain won the tender through competitive bidding, conducted by NHAI, by requesting the lowest fixed subsidy of US$ 114.8 million (INR 5560 million @ 48.41 INR/USD). Under the contract, the project company was to recover the capital costs and operating costs including returns through tolling during the term of concession. No other bidding detail was available at the time of collection of this information. The concession agreement was signed in May 2009. The estimated capital cost of the project at the time of bidding was US$ 311.7 (INR 15090 mn @ 48.41 INR/USD) million. The project reached financial closure in December 2009. Debt equity ratio for all the three projects has been set at 75:25.Soma-Isolux accessed funds from half a dozen public sector banks with tenure of 15 years and two-year moratorium. Cost of funds were pegged anywhere between 13 and 14 per cent. Construction on the project was expected to begin in June 2009 and completed by Dec 2011.