L&T Devihalli Hassan Tollway Limited

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On 17th June 2010, National Highway Authority of India (NHAI) awarded a 30-year concession (including construction period of 30 months) to L&T Infrastructure Development Projects Limited (L&T IDPL), for the strengthening, improvement, 4-laning,operation and maintenance, and tolling of 78.75kms of Devihalli-Hassan section from KM110.000 to KM189.500 of National Highway 48, in the state of Karnataka. Under the contract, L&T was responsible for the design,construction,finance, operation and maintenance,strengthening and widening the existing 2-lane carriageway to 4-lane divided carriageway.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 scope was inclusive of the construction of a 19 km by-pass (new 2-lane bypass for Channarayanapatna and widening of existing 2-lane bypass for Hassan) and 2 state-of-the-art Toll Plazas for the benefit of the commuters.The expansion project was part of the National Highway Development Program (NHDP-III). Connecting the coastal city of Mangalore with the state capital Bangalore, which were two major cities of Karnataka state, this highway was an important link for the transport of goods from Mangalore Port to the city of Bangalore. L&T IDPL established L&T Devihalli Hassan Tollway Limited (DHTL),a special purpose vehicle, to implement the project. The SPV won the tender through international competitive bidding, conducted by NHAI, by requesting the lowest grant of US$ 39.4mn (INR 1801.8mn @45.7 INR/USD). This grant would be disbursed by NHAI to DHTL after it had expended the equity and would be disbursed proportionately along with the term loans thereafter remaining to be disbursed by the senior lenders under financing agreements. Other details of bidding were not available at the time of collection of this information. Under the contract, the SPV was to recover the capital costs and operating costs including returns through tolling, during the term of concession. L&T would execute the EPC contract for the project. The concession agreement was signed on 17th June 2010. The project was financed with a grant/debt/equity ratio of 36/45/18. The estimated capital cost of the project at the time of financial closure was US$ 108.1mn (INR 4940mn @45.7INR/USD). Apart from the upfront grant of US$ 39.4mn (INR 1801.8mn), financing comprised of a term loan of US$ 49mn (INR 2240mn) and sponsor equity of US$ 19.7mn (INR 900mn).Other details of financing were not known at the time of collection of this information. The project was expected to start construction in December 2010 (Appointed Date) and was expected to be completed by May 2013. The project finally achieved commercial operation in November 2013 (delay because of change in scope as well as delays in handover of Right of Way).