Indore Kalghat Road Project

Active

In December 2005, National Highways Authority of India (NHAI) awarded a 20 year concession to Oriental Pathways (Indore) Private Limited (OPIPL) to upgrade, finance, operate and maintain the 80 km section on National Highway number three (NH-3) between Indore and Kalghat, in Madhya Pradesh State. This project primarily involved strengthening and widening of the existing two lane stretch to a four lane dual carriageway. The concession term included the construction period of 30 months. OPIPL was to be compensated for the capital and operating costs from the tolls collected during the operational period of about 17.5 years. The concession agreement between NHAI and OPIPL was signed in March 2006. This road upgrade was part of NHAI’s National Highway Development Project (NHDP) Phase III A. The objective of NHDP Phase IIIA was to widen (four lane) sections of national highways carrying high volume of traffic, connecting state capitals with the NHDP Phases I and II network and providing connectivity to places of economic, commercial and tourist importance. OPIPL, a special purpose company established to implement this project, was jointly owned by Oriental Structural Engineers Private Ltd. and Delhi Brass Consortium. Note that information on the exact ownership structure of OPIPL was not available from public sources. OPIPL won the project in an international competitive tender, conducted by NHAI, by quoting an upfront payment of US$ 1.3 million. India’s highway development policy allowed ‘viability funding’ by NHAI to the tune of 40 percent of the capital costs as grant to the concessionaire, subject to competitive bidding. However, in high traffic density corridors like this project that are very profitable, the bidders usually offered an upfront payment to NHAI instead of seeking a grant. The total capital cost of the project was estimated at US$ 119.26 million. Construction work on the project began in September 2006 and was expected to be completed by March 2009. As per NHAI, the project was completed in September 2009 and is currently operational.