Indore-Edelabad Road

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VIVA Highways Private Ltd. was awarded a 15 year build-operate-transfer (BOT) contract for the 203 km. Indore-Sanawad-Burhanpur-Edelabad Road by the State of Madhya Pradesh in September 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. 123 crore (approx. US$28 million), 45 crore of which was given in the form of a government grant/subsidy. The project was part of the first 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 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. The IDFC had approved and sanctioned the financing package and provided a term loan of Rs. 65 crore through syndication for the Indore-Edlabad Road. The first installment of Rs.50 crore was released in early-2003. Nine tranches of subsidy were released by the government and investment of more than Rs 121 crore was done by mid-2003. As of December 2003, two sections (134 km) of the road had been completed and toll collection had begun. Project completion was scheduled for early 2004.