Hospet Chitradurga Tollways Limited

Cancelled

In November 2011, the National Highway Authority of India (NHAI) awarded a 25 year concession (including construction period of 910 days) to Ramky Infrastructure Limited for the strengthening, improvement, four-laning, operation and maintenance, and tolling of 124.5kms of Hospet-Chitradurga section of NH-13 from KM 299.000 to KM 418.600 in the state of Karnataka. Under the contract, Ramky was responsible for the design, construction, finance, operation and maintenance and strengthening of the existing carriageway to a 4-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, etc.The expansion project, part of National Highway Development Project Phase-III, was expected to ease traffic congestion and give significant stimulus to trade and commerce in the entire region. Ramky Infrastructure Limited established Hospet Chitradurga Tollways Limited (HCTL), a special purpose vehicle, to implement the project. The SPV won the tender through international competitive bidding, conducted by NHAI, by quoting the highest upfront premium payment to NHAI of US$12.6mn (INR 630mn @50 INR/USD).There were 37 prequalified bidders for this project, out of which 14 had finally bid for this project. The nearest competitor, L&T IDPL had quoted a premium of INR 450mn. Under the contract, the SPV was to recover the capital costs and operating costs including returns through tolling during the term of concession. The concession agreement was signed on 19th January 2012. The project attained financial closure on 9th November 2012. The debt/equity ratio of the project was 75/25. The estimated capital cost of the project at the time of financial closure was US$ 220.6 mn (INR 11028mn @50 INR/USD). The project was expected to be financed through debt financing of US$ 166mn (INR 8300mn) and sponsor equity of US$ 54.6mn (INR 2728mn). The lead arranger was Axis Bank and other participating banks were IDBI Bank Ltd, Bank of India, India Infrastructure Finance Company Ltd, State Bank of Hyderabad, State Bank of Patiala, State Bank of Travancore, Central Bank of India and Oriental Bank of Commerce. Construction on the project began in December 2012 and was expected to be completed by June 2015. However Ramky had backed out of the project citing lack of viability of the project under the severe economic downturn and the associated upfront premium payment to NHAI. Although NHAI had agreed to defer premium payments (inspite of reported aggressive bids by developers) to help concessionaires to use cashflows from the initial few years for equity commitments for the project, Ramky failed to start the work. Finally NHAI had terminated the Concession in December 2013.