GVK Bagodara Vasad Expressway Private Limited

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In January 2011, the Gujarat State Road Development Corporation Limited (GSRDC) awarded a 27 year concession (including construction period of 30months) to GVK Group, for the strengthening, improvement, widening, operation and maintenance of 101.76kms (Km 0/0 to Km 101/9) of existing three lanes of Bagodara-Wataman-Tarapur-Vasad Road of Gujarat State Highway No.8 (SH-8),in the state Gujarat. Under the contract, GVK group was responsible for the design, construction, finance, operation and maintenance,strengthening and widening (from existing 3-lane highway to a 6-lane divided dual Carriageway with median) the existing carriageway in rigid pavement. The project also includes the widening of existing and new major and minor creek bridges, flyovers, vehicular and pedestrian underpasses, and foot over-bridges.The highway passes through the major towns namely Vataman, Tarapur and Borsad. SH-8 traverses through two districts namely Ahmedabad and Anand serving highly rich agricultural and industrialized areas of Anand District and joining NH – 8 at Vasad. SH – 8 (Bagodara – Wataman – Tarapur – Vasad Road) serves as an important link connecting Central Gujarat and Mumbai to Saurashtra region. The Project Highway had significant traffic flow advantages in terms of it being on the natural trade route between key sea-ports on Western Coast / Southern India. It serves key sea-ports in Saurashtra/Kutch like Pipavav, Porbandar, Kandla, Mundra etc. Mega Projects in the Project Influence Area, like DMIC, Savli Industrial Estate etc, were expected to be developed, which would lead to additional traffic and substantial growth. GVK Group established GVK Bagodara Vasad Expressway Private Limited, a special purpose vehicle, to implement the project. The SPV won the tender through national competitive bidding, conducted by GSRDCL, by quoting the highest revenue share of 15% of toll revenues in the first year which would increase by 1% every subsequent year of the concession period.Under the contract, the SPV was to recover the capital costs and operating costs including returns through tolling during the term of concession. The SPV had entered into a fixed-price, fixed-time EPC contract with GVK Projects & Technical Services Ltd. (GVKPTSL), a GVK group company The concession agreement wa signed on February 21st, 2011 (Draft concession agreement had been approved by Executive Commitee in September 2009). The project subsequently 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$ 253million (INR 11890.3mn @ 47 INR/USD). Financing comprised INR 8917.7mn 17-year 3-month term loan, and INR 2972.6mn sponsor equity. The debt was solely arranged by Axis bank. Construction on the project began in November 2011 and was expected to be completed by May 2014.