IVRCL Chadrapur Tollways Limited

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In September 2010, Government of Maharashtra (through MSRDC) signed a 30-year concession (including construction period of 2 years) with IVRCL Limited (IVRCL) for the strengthening, improvement,four-laning,operation and maintenance,and tolling of 85.11kms of Karanji-Wani-Ghuggus-Chandrapur section of Maharashtra State Highway 6 & 7 in Yavatmal and Chandrapur district in Maharashtra. Under the contract, IVRCL was responsible for the design, construction, finance, operation and maintenance,strengthening and widening the existing carriageway to 4-lane road. 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 was expected to ease traffic congestion and give significant stimulus to trade and commerce in the entire region.The project stretch passed through a region with intense mining activity. The project stretch was also an important inter-state link, connecting Madhya Pradesh, Andhra Pradesh and Maharashtra. IVRCL established IVRCL Chadrapur Tollways Limited (ICTL), a SPV in October 2010, to execute this project. The SPV won the tender through international competitive bidding, conducted by MSRDC,by quoting the lowest upront grant of US$ 36mn (INR 2110mn). Subsequently the grant amount was revised to INR 1995mn (with a corresponding increase in sponsor equity committment). Government of India had sanctioned the release of grant amount of INR 997.5mn and the balance INR 997.5mn was to be arranged by State Government. Under the contract, the SPV was to recover the capital costs and operating costs including returns through fixed upfront payment from MSRDC as well as through tolling during the term of concession. The concession agreement was signed in June 2012. The project attained initial financial closure in 2012, details were however not known. The estimated capital cost of the project at the time of financial closure was US$ 125.6mn (INR 7359.9mn @58.6 INR/USD). However, owing to delay in execution of the project the total cost had increased to US$ 132.4mn (INR 7757.7mn), primarily on account of interest during construction component.The revised project expenditure was expected to be funded with a debt of US$ 58.3mn (INR 3418.3mn), grant of US$ 34mn (INR 1995mn), and sponsor equity of US$ 40mn (INR 2344.3mn). On 30th June 2014, a 14-year 11-months term loan had been arranged by India Infrastructure Finance Co Ltd (614mn), Indian Overseas Bank (635mn), Central Bank of India (635mn), Bank of India(1255.9mn). The term loan had a repayment schedule of 49 quarterly installments. The balance of INR 278.4mn was yet to be tied-up. Construction on the project began in June 2011 and was expected to be completed by June 2014 (revised against an earlier schedule of July 2013). With continuing delay in receipt of grant from state government resulting in delay in the project progress, ICTL’s management is in the process of seeking further modification in the scheduled commercial operation date (SCOD) and the subsequent debt repayment commencement date.