Kadtal-Armur NH-7

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In December 2006, the National Highway Authority of India (NHAI) signed a 20 year concession contract (including two years of construction period) to a India’s Hindustan Construction Company Limited (HCC) to widen and strengthen the 31 km section on National Highway (NH) 7 between Kadtal and Armur, in the state of Andhra Pradesh. Under the contract, HCC 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. HCC established Nirmal BOT Ltd. (NBL), a special purpose vehicle, to implement the project. HCC won the tender through competitive bidding, conducted by NHAI by making the lowest annuity payment request. Under the contract, Nirmal BOT Ltd. was to recover the capital costs and operating costs including returns through a fixed annual payment (annuity) from the NHAI in the amount of US$ 11.9 million during the concession term (excluding two and a half 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 December 2006.The total capital cost of the project was estimated at US$ 79.5 million. This included a 16 year term loan of $63.768 million with State Bank of India in the lead. The debt equity ratio was 80/20 Construction on the project began in December 2006 and was expected to be completed by November 2008. www.projectstoday.com www.pppinindia.com www.nhai.org www.infrastructure.gov.in