IVRCL Gundugolanu Rajahmundry Tollways Limited

cancelled

In March 2012, the National Highway Authority of India (NHAI) awarded a 24-year concession (including construction period of 30 months) to IVRCL Assets & Holdings for the strengthening, improvement, six-laning,operation and maintenance, and tolling of 120.74kms of Gundugolonu-Rajahmundry section from km.1022.494 to km.901.753 of National Highway-5 (NH-5) in the state of Andhra Pradesh. Under the contract, IVRCL was responsible for the design, construction, finance, operation and maintenance and strengthening of the existing 4-lane carriageway to a six-lane highway with paved shoulders. The scope included construction of 6-lanes including construction of new pavement, rehabilitation of existing pavement, construction and/or rehabilitation of 1-major and 38-minor bridges, culverts, service roads, road intersections, 29-underpasses, 2-railway overbridges, interchanges, toll plaza, tunnel section, etc.The expansion project was part of National Highway Development Project Phase-IV. NH-5 that tuns along the India's East Coast through the states of Tamil Nadu, Andhra Pradesh, Odissa, West Bengal, is a major highway in India. The main object of the project is to expedite the improvement of infrastructure in Andhra Pradesh and also in reducing the time and cost of travel for traffic, particularly heavy traffic, plying between Gundugolanu and Rajahmundry. The stretch is a part of the Chennai-Kolkatta Golden Quadrilateral Corridor. The project is covered in the districts of Guntur, Krishna, West Godavari and East Godavari in Andhra Pradesh. IVRCL established IVRCL Gundugolanu Rajahmundry Tollways Limited (IGRTL), a special purpose vehicle on 16th April 2012, to implement the project. The SPV won the tender through international competitive bidding, conducted by NHAI, by quoting the highest annual premium. The SPV would would pay NHAI a sum of US$ 13.5mn (INR 721mn @53.44 INR/USD) in the first year of operations with 5% increase in each subsequent year (This amounted to an NPV payout of about US$ 187.6mn over the life of concession period at a discount rate of 10%). Of the 35 pre-qualified bidders, about 3 developers finally bid for the project. Under the contract, the SPV was to recover the capital costs and operating costs including returns through tolling during the term of concession. The EPC contract for the project had been awarded to IVRCL Limited. Construction on the project was expected to begin before December 2012. However, due to delay in land acquisition along the right of way by NHAI, IGRTL failed to meet the project deadlines.While discussion of restructuring of premium payment was going on with NHAI, in December 2013 NHAI finally cancelled the concession for the project. The concession agreement was signed sometime before November 2012, based on Investors call transcript dated November 2012. Due to lack of data, the CA signing date is assumed in November 2012. The estimated cost of the project at the time of bidding was US$ 302.6mn (INR 16170mn @53.44 INR/USD). Funding closure had not been achieved at the time of cancellation of the project.