L&T BPP Tollway Limited

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In April 2011, the National Highway Authority of India (NHAI) awarded a 23-year concession (including construction period of 30 months) to L&T IDPL for the strengthening, improvement, four-laning,operation and maintenance, and tolling of 244.12 kms of Beawar-Pali-Pindwara section of National Highway-14 (NH-14) in the states of Rajasthan. Under the contract, L&T was responsible for the design, construction, finance,operation and maintenance and strengthening of the existing 2-lane carriageway to a four-lanehighway with paved shoulders. The scope included construction of 4/6-lanes including construction of new pavement, rehabilitation of existing pavement, construction and/or rehabilitation of major and minor bridges, culverts, service roads, road intersections, interchanges, toll plaza, tunnel section, etc.The expansion project was part of National Highway Development Project Phase-III. This section was considered to be one of the main evacuation routes for traffic from Kandla and Mundra Ports travelling towards Northern India - to Rajasthan, Haryana, Delhi, Punjab and beyond. The Project Corridor falls within the proposed Delhi-Mumbai Industrial Corridor (DMIC) and was expected to accelerate the development and growth prospects in this region. L&T IDPL established L&T BPP Tollway Limited (BPPTL), a special purpose vehicle in May 2011, to implement the project. The SPV won the tender through international competitive bidding, conducted by NHAI, by quoting the highest annual premium. The SPV would would pay NHAI a sum of US$ 53.5mn (INR 2510.1mn @46.7 INR/USD) in the first year of operations with 5% increase in each subsequent year (This amounted to an NPV payout of about US$ 726.7mn over the life of concession period at a discount rate of 10%). Of the 19 pre-qualified bidders, about 16 developers finally bid for the project. Under the contract, the SPV was to recover the capital costs and operating costs including returns through tolling during the term of concession. The EPC contract for the project had been awarded to L&T Limited. The concession agreement for the project was signed on 22nd June 2011.The project was financed with a debt/equity ratio of 75/25. The estimated capital cost of the project at the time of financial closure was US$ 529.3mn (INR 24720mn @46.7INR/USD). Financing comprised of a term loan of US$ 397mn (INR 18540mn) and sponsor equity of US$ 132.3mn (INR 6180mn). As regards the premium restructuring approved by NHAI for host of highway projects in 2013, BPPTL could now defer premium payable to the tune of INR 15000mn, i.e ~65% of total premium payable, till FY 2021-2022 subject to a minimum annual payment. This was expected to result in an increase in the operational funds available for debt servicing and obviate the need for additional fund infusions from the promoter.Other details of financing were not known at the time of collection of this information. Construction on the project was expected to began on 19th December 2013 (Appointed Date) and was expected to be completed by June 2014. BPPTL now expects to achieve COD and commence tolling by March 2015 (as against initial estimate of June 2014, delay attributable to delays in handover of Right of Way by NHAI).