IRB Tumkur Chitradurga Tollway Private Limited

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In May 2010, the National Highway Authority of India (NHAI) awarded a 26 year concession (including construction period of 30 months) to IRB Infrastructure Developers Limited for the strengthening, improvement, six-laning, operation and maintenance of 114kms of Tumkur-Chitradurga Section of National Highway-4 (NH-4),from Km75 to Km189,excluding Tumkur & Chitradurga bypasses,in the state of Karnataka. Under the contract, the consortium was responsible for the design, construction,finance, operation and maintenance and strengthening of the existing carriageway to a 6-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 - V, was expected to ease traffic congestion and give significant stimulus to trade and commerce in the entire region. IRB Infrastructure Developers Limited, established IRB Tumkur Chitradurga Tollway Private Limited, a special purpose vehicle, to implement the project. The SPV won the tender through international competitive bidding, conducted by NHAI, by quoting the highest premium to be paid to NHAI - a payment of US$ 31.2 million (INR 1404 million @45 INR/USD) paid by the SPV in the first year, which shall be increased by 5% year on year (This translates to an NPV about US$461mn payout through the concession period at a discount rate of 10%). Under the contract, the SPV was to recover the capital costs and operating costs including returns through tolling during the term of concession. The concession agreement was signed in August 2010. The project attained financial closure in February 2011. The debt equity ratio of the project was 70:30. The estimated capital cost of the project at the time of financial closure was US$ 267.5 million (INR 12040mn @45 INR/USD). Financing comprised INR 8310mn 16year-6months term loan,and INR 3730mn equity. The participating banks were IDFC(5000mn),Bank of Baroda(1250mn),IDBI Bank Ltd(1000mn),HDFC(1060mn). Construction on the project began in March 2011 and was expected to be completed by August 2013.