Guna Bypass

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In July 2005, National Highways Authority of India (NHAI) signed a concession agreement with Guna Infrastructure Limited (GIL) for the upgrade, operation and maintenance of the 14 km long Guna bypass on National Highway three (NH-3), in the state of Madhya Pradesh. Under the agreement, GIL was required to design, finance and four-lane the existing two-lane stretch in the town of Guna in return for the right to collect tolls during the concession term. Information on the exact length of the concession term was not available. This road upgrade project, part of National Highway Development Project – Phase III A, was expected to ease traffic congestion and give significant stimulus to trade and commerce in the entire region. GIL, a wholly owned subsidiary of IVRCL Infrastructures & Projects Ltd, was established to implement this project. IVRCL won the concession in an international competitive tender, conducted by NHAI, by offering to make an upfront payment of US$ 4.2 million. India’s highway development policy allowed ‘viability funding’ by NHAI to the tune of 40 percent of the capital costs as grant to the concessionaire, subject to competitive bidding. However, in high traffic density corridors like this one that are very profitable, the bidders usually offered an upfront payment to NHAI instead of seeking a grant. The total capital cost of the project was estimated at US$ 10.2 million. In 2006, the project company obtained a loan of Rs.260.00 Millions (US$5.75 million) financed by YES Bank Ltd, payable within a year. Construction work on the project began in January 2006 and was expected to be completed by July 2007. As per NHAI, the project was completed in December 2007 and is currently operational.