Kashipur Sitarganj Highways Private Limited

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On 26th November 2012, the National Highway Authority of India (NHAI) awarded a 21-year concession (including construction period of 910 days or approximately 2.5-years) to Galfar Engineering and Contracting SAOG of Oman (Galfar) for the strengthening, improvement, 4-laning, operation and maintenance, and tolling of 77.2kms (from KM175.0 to KM252.0) of Kashipur-Sitarganj section of National Highway-74 (NH74),in the states of Uttarakhand (74kms) and Uttar Pradesh (3.2kms). The project was covered in the districts of Udhamsingh Nagar in Uttarkhand and in Rampur and Bareilly in Uttar Pradesh. Under the contract, Galfar was responsible for the design, construction, finance, operation and maintenance and widening of the existing 2-lane carriageway to a 4-lane highway with paved shoulders, with a provision to augment capacity at a later date. The scope included 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 part of National Highway Development Project Phase-IV.The project would expedite the improvement of infrastructure in Uttarakhand and Uttar Pradesh and also help in reducing the time and cost of travel for traffic plying between Kashipur-Sitarganj. The NH-74 was an important link connecting rapidly growing industrial and commercial hubs like Haridwar, Kashipur, Udhamsingh Nagar of Uttarkhand and Bareilly and eastern parts of Uttar Pradesh. Galfar established Kashipur Sitarganj Highways Private Limited (KSHPL), a special purpose vehicle, to implement the project. The SPV won the tender through international competitive bidding,conducted by NHAI, by requesting the lowest upfront subsidy of US$ 38.0million (INR 2230mn @58.6 INR/USD). Out of the 30 pre-qualified bidders, only Galfar particpated in the final bid. Under the contract, the SPV was to recover the capital costs and operating costs including returns through tolling during the term of concession. The project attained financial closure on 12th September 2013. The grant/debt/equity ratio for the project was 29/56/15. The estimated capital cost of the project at the time of financial closure was US$ 129.2mn (INR 7574.1mn @58.6 INR/USD). Apart from viability gap funding (grant) of INR 2230mn, financing comprised of a 15-year term loan of US$ 72mn (INR 4220mn) and sponsor equity of US$ 19.2mn (INR 1124.1mn). The term loan had a grace period of 12-months and repayment schedule of 138 monthly installments.The debt was arranged by Central Bank of India and the participating banks were Corporation Bank (740mn),Dena Bank (740mn),Bank of India (1000mn),Vijaya Bank (740mn). Construction on the project was expected to begin in November 2013 and be completed by May 2015.