IRB Ahmedabad Vadodara Super Express Tollway Private Limited

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In April 2011, the National Highway Authority of India (NHAI) awarded a 25 year concession (including construction period of 36 months) to IRB Infrastructure Developers Limited for the strengthening, improvement, 6-laning, operation and maintenance, and tolling of 102.300 kms of Ahmedabad to Vadodara section of NH-8 from km. 6.400 to km. 108.700 and improvment of 93.302 kms of existing 4-lane Ahmedabad Vadodara Expressway (NE1 section from km. 0.000 to km 93.302), in the State of Gujarat. Under the contract, IRB was responsible for the design, construction, finance, operation and maintenance and widening of the existing carriageway to a 6-lane highway with paved shoulders. The scope would 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, first project under Ultra Mega Highway Program (part of National Highway Development Project Phase-V) would ease traffic congestion and give significant stimulus to trade and commerce in the entire region. IRB Infrastructure Developers Limited (IRBIDL) established IRB Ahmedabad Vadodara Super Express Tollway Private Limited, a special purpose vehicle, to implement the project. The SPV won the tender through competitive bidding, conducted by NHAI,by quoting the highest premium payment to NHAI. The SPV would pay NHAI a sum of of US$ 61.9mn (INR 3096mn @50 INR/USD) in the first year of operations with 5% increase in each subsequent year (This amounted to an NPV payout of US $872.7mn over a concession period of 25 years at a discount rate of 10%). There were 22 pre-qualified bidders out of which 13 offered their final bids. The L2 Bidder offered a premium of about INR 1200mn. Under the contract, the SPV was to recover the capital costs and operating costs including returns through tolling during the term of concession. Traffic toll rates would be subject to annual revision and are partially linked to the wholesale price index (WPI). Modern Road Makers Private Limited (MRMPL), the construction arm of IRBIDL would execute the EPC for the project. The concession agreement was signed on 25th July 2011. The project attained financial closure on 10th February 2012. The debt equity ratio of the project was 68/32. The estimated capital cost of the project at the time of financial closure was US$ 976mn (INR 48800mn @ 50 INR/USD). Financing comprised debt of US$ 660mn (INR 33000mn), and sponsor equity of US$ 316mn (INR 15800mn). The debt comprised INR 28500mn (US$ 560mn) Rupee term loan of 18 years maturity and US$100mn (INR 5000mn) external commercial borrowing. The INR28500 term loan had a grace period of 1 year and was priced at 12.35% interest rate with annual resets (including during construction period). The repayment schedule had 168 structured monthly installments commencing in April 2016 with maturity in March 2030. The ECB of US$ 100mn was priced at 495 basis points over the prevailing 6-month LIBOR. The repayment to the ECB lender will be in line with the repayment schedule of the existing rupee lenders. IRB had also undertaken to meet any shortfall in debt servicing due to LIBOR or exchange rate fluctuations.The debt was arranged by Bajaj Consultant Private Limited. The participating banks were IDFC, Punjab National Bank, ICICI, Andhra Bank, Bank of India, Indian Overseas Bank, Union Bank of India, IIFCL. Construction on the project was expected to begin in January 2013 (Appointed Date declared by NHAI, which acts as the beginning of the concession period) and be completed by December 2015. Delay in getting various clearances led to a delay in the Appointed Date.