Gurgaon Kotputli Jaipur NH-8

active

In June 2008, the National Highway Authority of India (NHAI) signed a 12 year concession (including 30 month of construction period) with a consortium formed by Dubai’s Emirates Trading Agency and India’s KMC Construction Limited to widen and strengthen the 225.6 km section on National Highway (NH-8) between Gurgaon Kotputli and Jaipur in the states of Haryana and Rajasthan. Under the contract, the consortium was responsible for the design, 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 Pink City Expressway Private Limited, a special purpose vehicle, to implement the project. The consortium won the tender through international competitive bidding, conducted by NHAI, by quoting the highest (48%) revenue share from operations to NHAI. This revenue sharing proportion would increase by 100 basis points (1 percentage point) every year, up to the end of the 12-year concession period (60%). Under the contract, Pink City Expressway Private Limited was to recover the capital costs and operating costs including returns through tolling during the term of concession. The concession agreement was signed in June 2008. The project reached financial closure in April 2009 with debt equity ratio of 4:1 or 80/20. The expected capital cost of the project at the time of signing of concession of concession agreement was US$ 444 million whereas the capital cost for the project at the time of financial closure was US$ 704 million. The change in the project cost was due to an initial estimate of NHAI on lower side and subsequent design changes to the project. A consortium led by Axis Bank and IDBI was to provide a debt of US$ 563 million. The consortium of banks was to provide the rupee loan at 12 per cent rate of interest. Contribution of ETA & KMC Constructions Ltd. to the equity was US$ 72 million and US$ 69 million respectively. Construction on the project began in June 2008 and was expected to be completed by December 2010.