Khalghat-Borghat Highway

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In April 2008, the National Highway Authority of India (NHAI) signed a 18 year concession (including 30 months of construction period) with a consortium of Navayuga Engineering Company Ltd and SEW Infrastructure Ltd, to widen and strengthen the 82.8 km section on National Highway (NH-3) in the state of Madhya Pradesh. Under the contract, the consortium 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 Phase IIIA, was expected to ease traffic congestion and give significant stimulus to trade and commerce in the entire region. In June 2007, the National Highways Authority of India (NHAI) initiated an international competitive bidding (ICB) process inviting proposals from eligible parties. The ICB process resulted in the selection of a consortium comprising Navayuga Engineering Company Limited (NECL) & Sew Infrastructure Limited (SEW). The selection was, based on percentage of revenue (the Premium) that the Consortium offered to share with NHAI in consideration of the grant of Concession. The Premium offered by the Consortium translated into a revenue share of 3.11% for the first year, starting from the date of commercial operations (or COD). This revenue share proportion would increase by 1 percentage points (1 percentage point) every year, up to the end of the 18-year (21.11%) concession period. The Concession Agreement also entitled the Company to collect and retain toll from various users of the Project Highway from the date of commencement of commercial operations (COD). A SPV by the name of SEW Navayuga Barwani Tollways Private Limited (SNBTPL), was promoted by NECL (51% equity) and SEW (49% equity) to execute the project. The Concession Agreement was signed between SNBTPL, as the Concessionaire, and NHAI on April 16, 2008. The project was expected to attain its financial closure by September 2008 but it reached financial closure in November 2008. The estimated capital cost of the project at the time of signing of concession agreement was US$ 129 million. The project cost at the time of financial closure was estimated at US$ 185 million with a debt-equity ratio of 70:30. The change in the project cost was due to an initial estimate of NHAI on lower side and subsequent design changes to the project. In November of 2008, SBI Capital solely arranged US$ 135 million term loan to finance the project. Whereas the promoters contribution was US$ 60 million. Several Indian banks participated in the deal. Construction on the project began in April 2008 and was expected to be completed by September 2010.