IRB Surat Dahisar Tollway Pvt. Ltd.

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In April 2008, the National Highway Authority of India (NHAI) signed a 12 year concession to a consortium formed by India’s IRB Infrastructure Developers Ltd. and Singapore’s Deustche Bank AG to widen and strengthen the 239 km section on National Highway (NH-8) between Surat and Dahisar in the state of Gujarat. Under the contract, the consortium was responsible for the design, finance, operation and maintenance and widening of the existing four-lane highway to a six-lane highway with paved shoulders. The expansion project, part of National Highway Development Project Phase -V, was expected to ease traffic congestion and give significant stimulus to trade and commerce in the entire region. The consortium established IRB Surat Dahisar Tollway Pvt. Ltd., a special purpose vehicle, to implement the project. The consortium won the tender through international competitive bidding, conducted by NHAI, by quoting the highest (38%) revenue share from operations to NHAI. This revenue share proportion would increase by 100 basis points (1 percentage point) every year, up to the end of the 12-year (50%) concession period. Under the contract, IRB Surat Dahisar Tollway Pvt. Ltd. was to recover the capital costs and operating costs including returns through tolling during the term of concession. The concession agreement was signed in April 2008. The project reached its financial closure in February 2009 with debt equity ratio of 69/31. The project cost estimated at the time of signing of concession agreement was US$ 396 million whereas the capital cost of the project at the time of financial closure was US$ 664 million. The change in the project cost was due to an initial estimate of NHAI on lower side and subsequent design changes to the project. A consortium led by Canara Bank and Indian Overseas bank was to provide a debt of US$ 458 million. Contribution of IRB Infrastructure Developers Ltd. and Deustche Bank to the equity was US$ 114 million and US$ 13 million respectively. The remaining amount of US$ 78 million was expected to be financed from IRB’s internal accruals. Construction on the project began in January 2008 and was expected to be completed by August 2011