KNR Walayar Tollways Private Limited

Active

On 4th August 2012, the National Highway Authority of India (NHAI) awarded a 20 year concession (including construction period of 910 days) to KNR Construction Limited for the strengthening, improvement, four-laning, operation and maintenance, and tolling of 54kms of Walayar-Vadakkancherry section on National Highway 47 between km 182.250 to km 240, in the state of Kerala. Under the contract, KNR Construction was responsible for the design, construction, finance, operation and maintenance and strengthening of the existing carriageway to a 4-lane highway with paved shoulders. The scope will include 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-II, was expected to ease traffic congestion and give significant stimulus to trade and commerce in the entire region. The stretch was an important highway connecting industrial hubs of Tamil Nadu with ports of Kerala. The major settlements influencing the traffic on the project road included Tirupur, Coimbatore, Palakkad, Kanzikode, Thrissur and Kochi. In the absence of competing roads of adequate capacity and quality, long-haul traffic has to necessarily pass through the project road. Nearly 60% of the projected traffic was likely to be commercial traffic, which, while holding high revenue potential, is also vulnerable to volatility mirroring economic cycles. KNR Construction Limited established KNR Walayar Tollways Private Limited, a special purpose vehicle, to implement the project. The SPV won the tender through competitive bidding, conducted by NHAI, by quoting the lowest viability gap funding (upfront subsidy) of US$ 45.1mn (INR 2646mn @58.6 INR/USD). Under the contract, the SPV was to recover the capital costs and operating costs including returns through tolling during the term of concession. KNR Constructions Limited would execute the EPC for the project. The concession agreement was signed in 17th September 2012. The project attained financial closure on 13th May 2013. The grant/ debt/ equity ratio was 29/55/16. The estimated project cost at the time of financial closure was US$ 153.7mn (INR 9005.1mn @58.6 INR/USD). Apart from the upfront grant (VGF) of US$ 45.1mn, financing comprised a term loan of US$ 85.3mn (INR 5000mn) and sponsor equity of US$ 23.2mn (INR 1359.1mn). The bank debt's had a variable interest rate (currently 12.25%), with a reset every year post commercial operation date (COD). The loan providers were Central Bank of India, Bank of India, Corporation Bank, Canara Bank and Vijaya Bank. Construction on the project was expected to begin in October 2012 and be completed by November 2015. 92% encumbrance free right of way was handed over to KWTPL by the National Highway Authority of India at the time of signing of concession agreement.