GVRMP Whagdhari Ribbanpally Tollway Private Limited

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On 3rd April 2010, the Karnataka Road Development Corporation Limited awarded a 30 year concession (including construction period of 2 years) to a consortium of GVR Infra Projects Limited, RMN Infrastructure Limited, and Prathyusha Associates Shipping Private Limited, for the strengthening, improvement, widening, operation and maintenance of 141.2kms of Karnataka State Highway No.10 (SH-10) from Maharashtra border to Andhra Pradesh border via Aland, Gulbarga, Malkhed, Sedam, Ribbanpally (Whagdhari-Ribbanpally road) in Gulbarga District,in the state of Karnataka. Under the contract, the consortium was responsible for the design, construction,finance, operation and maintenance,strengthening and widening 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. Besides cutting down on travel time, the other benefits expected of this road widening are increase in traffic and trade activities, entry of more businesses in the region and infrastructure developments. The consortium of GVR Infra Projects Limited, RMN Infrastructure Limited (25%),and Prathyusha Associates Shipping Private Limited,established GVRMP Whagdhari Ribbanpally Tollway Private Limited, a special purpose vehicle, to implement the project. The SPV won the tender through international competitive bidding, conducted by KRDCL, by quoting the lowest grant (VGF). Interpretations of limited bidding information concludes that the consortium was the sole bidder. KRDCL, in November 2009, hence negotiated for a lower level of VGF request from a maximum cap on the VGF grant of 40% of the project cost (INR 2385.8mn excluding utility shifting, contingency, and financing, estimated at the time of bidding). The consortium agreed for a VGF of US$ 20.1mn (INR 906.6mn @45 INR/USD), which amounts to 38% of the project cost. Under the contract, the SPV was to recover the capital costs and operating costs including returns through tolling during the term of concession. The project attained financial closure on 7th January 2011. The debt/equity/grant ratio of the project was 53/25/22.The estimated capital cost of the project at the time of financial closure was US$ 90million (INR 4049.7mn @ 47 INR/USD). Apart from the upfront grant from Government of INR 906.6mn (INR 477.2mn from Central Govt,and INR 429.4mn from State Govt.),financing comprised INR 2137.3mn 14-year term loan, and INR 1005.8mn sponsor equity. The 2137.3mn term loan had a grace period of 7-months and a repayment schedule of 46 quarterly instalments.The debt was priced at 365 basis points above the SBI base rate. The debt was arranged by SBI Capital Markets.The participating banks were State Bank of India(1237.3mn), Karnataka Bank Ltd (500mn),State Bank of Mysore(250mn),Jammu & Kashmir Bank Ltd(150mn). Construction on the project began in January 2011 and was expected to be completed by January 2013.