Hoshangabad-Khandwa Road

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MSK Infrastructure and Toll Bridge Private Limited was awarded a 15 year build-operate-transfer (BOT) contract for the 185.6 km Hoshangabad-Harda-Khandwa Road by the State of Madhya Pradesh in May of 2002. There had been an urgent need to strengthen and upgrade the region’s roads due to a considerable increase in traffic and commercial activities. Total cost of the road was estimated at Rs. 81 crore (approx. US$18.5 million), 51 crore of which was given in the form of a government grant/subsidy. The project was part of the second phase of a larger, three phase state-wide road development program that aimed at constructing 15 new road corridors totaling 2155 km throughout Madhya Pradesh. The state had planned total expenditures of around Rs. 1,000 crore (approx. US$225 million) for the program with Rs. 500 crore of that amount raised through the issuance of infrastructure bonds that would be used to subsidize the private operators. Madhya Pradesh was the first Indian state to implement a road development program on such a large scale with private participation. Under the “Bond BOT” scheme, investment was made by the private developer who was then allowed to collect tolls on the road for a 15 year term, which was inclusive of the construction period. To make the projects more attractive, the government provided grants/subsidies to the private sector company on a competitive bidding basis. For each project, three privately outsourced consultants were appointed: a technical consultant, a financial consultant and a supervision and quality control consultant. Financial closure for the Hoshangabad-Harda-Khandwa Road had been achieved through SBI (State Bank of India) Investment, which provided over Rs. 44 crore. As of December 2003, five tranches of subsidy had been released by the government. It was projected that toll collection on first section would be started in early 2004. http://www.mpbridgecorporation.com/index.htm