Katni Bypass NH - 7

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In August 2002, the Public Works Department (PWD), Madhya Pradesh signed a 12 year concession (from the date toll collection will start on the road) with a consortium of Ashoka Buildcon Limited and DS Constructions Limited to construct a 35.2 km section on National Highway (NH-7) at Katni in the state of Madhya Pradesh. Under the contract, Ashoka Buildcon Limited and DS Constructions Limited was responsible for the design, finance, operation and maintenance and construction of a two-lane highway with paved shoulders. The expansion project was expected to ease traffic congestion and give significant stimulus to trade and commerce in the entire region. The consortium established 'Ashoka DSC Katni Bypass Road Private Limited', a special purpose vehicle, to implement the project. They won the tender through competitive bidding, conducted by PWD, by requesting the lowest fixed subsidy. Apart from this upfront payment by PWD, under the contract, DSC Katni Bypass Road Private Limited was to recover the capital costs and operating costs including returns through tolling during the term of concession. The concession agreement was signed in August 2002. The construction of the project began in August 2002. The construction was expected to be completed by July 2008. However the concession agreement does not contain any penalty clause for the late completion of the project and hence extension for completion of the project has been applied for. The project reached financial closure with debt equity ratio of 70/30 in January 2008. The expected capital cost of the project was US$ 15 million. A consortium led by Yes Bank Limited was to provide a debt of US$ 10.5 million. Contribution of Ashoka Buildcon Limited to the equity was US$ 4.5 million. Ashoka Buildcon Limited holds 99.89% in the project company whereas DS Construction Limited holds only 0.11% share.