Islam Nagar-Kadtal NH-7

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In May 2007, the National Highway Authority of India (NHAI) signed a 20 year concession contract (including two years of construction period) to a consortium formed by India’s Patel Engineering Limited and KNR Constructions Limited to widen and strengthen the 48 km section on National Highway 7 (NH7) between Islam Nagar and Kadtal, in the state of Andhra Pradesh. The consortium was responsible for the design, construction, finance, operation and maintenance and widening of the existing two-lane highway to a four-lane highway with paved shoulders. The expansion project, part of National Highway Development Project, was expected to ease traffic congestion and give significant stimulus to trade and commerce in the entire region. The consortium established Patel KNR Heavy Infrastructure Pvt. Ltd., a special purpose vehicle, to implement the project. The consortium won the tender through competitive bidding, conducted by NHAI by making the lowest annuity payment request. Under the contract, the company was allowed to recover capital and operating costs through a fixed annual payment (annuity) of US$ 22.18 million during the concession term (excluding two years of construction period). Under the annuity scheme, the private operator cannot collect tolls from the users of the facility. The project reached financial closure in May 2007.The total capital cost of the project was estimated at US$ 137 million. Construction on the project began in May 2007 and was expected to be completed by May 2009. www.projectstoday.com www.pppinindia.com www.nhai.org www.infrastructure.gov.in