Kiratpur Ner Chowk Expressway Limited

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In February 2012,the National Highway Authority of India (NHAI) awarded a 28-year concession (including construction period of 3 years) to ILFS Transportation Networks Limited (ITNL) for the strengthening, improvement, 4-laning, operation and maintenance,and tolling of 84.32kms of Kiratpur to Ner-Chowk Section from km 73.200 to km 186.500 on NH-21, in the state of Himachal Pradesh. Under the contract, ITNL was responsible for the design, construction, finance, operation and maintenance and widening of the existing carriageway to a 4-lane highway with paved shoulders. 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, part of National Highway Development Project Phase-III would ease traffic congestion and give significant stimulus to trade and commerce in the entire region. ILFS Transportation Networks Limited (ITNL) established Kiratpur Ner Chowk Expressway Limited (KNCEL) on 12th February 2012,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$ 26.9million (INR 1345.7mn @50 INR/USD). There were 28 pre-qualified bidders out of which 4 offered their final bids. Under the contract, the SPV was to recover the capital costs and operating costs including returns through tolling during the term of concession. The concession agreement for the project was signed on 16th March 2012. The project attained financial closure on 29th March 2012. The grant/debt/equity ratio for the project was 6/64/30. The estimated capital cost of the project at the time of financial closure was US$ 457.8mn (INR 22888.6mn @50 INR/USD). Apart from viability gap funding (grant) of INR 1345.7mn, financing comprised of 15-year term loan of US$ 295mn (INR 14748.6mn) and sponsor equity of US$ 135.9mn (INR 6794.3mn).The term loan had a repayment schedule of 54 quarterly instalments. The applicable interest rates was 11.75% which was expected to be reduced by 50 basis points on commissioning of the project. The debt was arranged by Yes Bank Limited. Construction on the project was expected to begin in March 2012 and be completed by September 2014.