GVK Bagodara Vasad Expressway Private Limited

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On 3rd January 2011, the Gujarat State Road Development Corporation (GSRDC) awarded a 27 year concession (including construction period of 30 months) with GVK Power & Infrastructure Limited (through its subsidiary GVK Developmental Projects Private Limited) for the rehabilitation, upgradation and operations and tolling of Bagodara-Wataman-Tarapur-Vasad section of State Highway-8, from Km 0/0 to Km 101/9, in the State of Gujarat. Under the contract, GVK Power & Infrastructure Limited was responsible for the the design, construction, finance, operation and maintenance,strengthening of the existing 2-lane carriageway to a 6-lane highway with paved shoulders. The scope will include construction of new pavement, rehabilitation of existing pavement, construction and/or rehabilitation of major and minor bridges, culverts,road intersections,interchanges, drains, traffic signages, traffic safety measures, etc. The project highway provides key connectivity to two national highways -NH8A (Ahmedabad-Rajkot-Probandar),and NH-8 (Mumbai-Delhi). The said highway catered to commercial traffic from industrial clusters in Bhavnagar, Savli, Sanand, Anand and ports in Saurashtra region (Pipavav, Porbandar, Mundra and Kandla). Also, it was the shortest link connecting Saurashtra/Kutch region to the highly industrialised regions of Surat,Vadodara,Ankleshwar and Mumbai.This road upgradation was expected to ease traffic congestion and give significant stimulus to trade and commerce in the entire region. GVK Power & Infrastructure Limited established GVK Bagodara Vasad Expressway Private Limited (GVKBVEPL), a special purpose vehicle, to implement the project. The SPV won the tender through domestic competitive bidding, conducted by GSRDC, by quoting the highest revenue share (premium). The SPV had quoted a revenue share of 15% for the 1st year which would increase every year by 1% through the life of the concession. Under the contract, the SPV was to recover the capital costs and operating costs including returns through tolling during the term of concession. GVK Projects and Technical Services is the EPC contractor of the project. The concession agreement was signed in 21st February 2011. The project attained financial closure on 16th November 2011. The debt equity ratio of the project was 75:25. The estimated capital cost of the project at the time of financial closure was US$ 237.8mn(INR 11890.3mn @ 50 INR/USD).Financing comprised a 17-year 3-month term loan of US$ 178.3mn (INR 8917.70mn) and sponsor equity of US$ 59.4mn (INR 2972.60mn). The debt was arranged by Axis Bank Limited. Construction on the project was expected to begin in March 2011 and was expected to be completed by September 2013.