GVR Ashoka Chennai ORR Limited

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In July 2013, Government of Tamil Nadu, Highways and Minor Ports Department, awarded a 20-year concession (including a 30-months construction period) to a consortium of GVR Infra Projects Limited and Ashoka Buildcon Limited for the strengthening, improvement,six-laning, operation and maintenance of 32kms of Chennai Outer Ring Road Phase-II from Nemilicheri in NH-205 to Minjur in Thiruvottiyur–Ponneri–Panchetti (TPP) Road, in Tamilnadu. Under the contract, the consortium was responsible for the design, construction, finance, operation and maintenance,strengthening and widening the existing carriageway to 6-lane divided carriageway.The scope included construction of new pavement, rehabilitation of existing pavement, construction and/or rehabilitation of major and minor bridges, culverts, road intersections,interchanges, drains, etc. The 62-km ORR project linked the peripheral areas of Chennai city from Vandalur in the south, about 25 km from Chennai on NH 45, to Minjur to the north of Chennai.The expansion project was expected to ease traffic congestion. The first phase of the project, 29.5 km linking Vandalur to Nazarathpet on NH 4 to Nemilichery on NH 205, was nearing completion (GMR Chennai Outer Ring Road Private Limited). The consortium of GVR Infra Projects Limited (50%) and Ashoka Buildcon Limited (50%), established GVR Ashoka Chennai ORR Limited (GACOL),a special purpose vehicle on 23rd July 2013, to implement the project. The SPV won the tender through international competitive bidding, conducted by TNRDC,by requesting the lowest annuity payment. Under the concession contract, it was proposed to avail an upfront payment of certain per cent of the construction cost and the remaining payments during the operation and maintenance period (17.5 years) of on annuity basis to be met out of state funds. Under this concession, GACOL was to recover the capital costs and operating costs including returns through an upfront payment of US$ 32.3mn (INR 1970mn) and 35 semi annual payment of US$ 19.7mn (INR 1199.7mn) during the term of operation of concession (17.5 years). The concession agreement for the project was signed on 18th September 2013. The project attained financial closure on 13th May 2014. The grant/debt/equity ratio of the project was 13/74/13. The estimated capital cost of the project at the time of financial closure was US$ 240.3mn (INR 14660mn @61 INR/USD). Apart from the upfront grant of US$ 32.3mn (INR 1970mn), financing comprised of a term loan of US$ 177mn (INR 10800mn), and sponsor equity of US$ 31mn (INR 1890mn). Other details of financing were not available at the time of collection of this information. The project construction started in March 2014 (Appointed Date) and was expected to be operational by August 2016.