L&T Halol Shamlaji Tollway Pvt. Ltd.

active

In September 2008, the Gujarat State Road Development Corporation (GSRDC) signed a 20 year concession (including construction period) with India’s Larsen & Toubro Limited (L&T) to widen and strengthen the 173 km section on State Highway between Halol-Godhra-Shamlaji in the state of Gujarat. Under the contract, L&T was responsible for the design, finance, operation and maintenance and widening of the existing two-lane highway to a four-lane highway with paved shoulders. The expansion project was expected to ease traffic congestion and give significant stimulus to trade and commerce in the entire region. Three highway stretches projects (Halol-Godhra-Shamlaji State Highway, Ahmedabad – Viringam-Maliya State Highway, and Rajkot-Jamnagar-Vadinar State Highway) were tendered in a competitive bidding as a single package. L&T won the tender conducted by GSRDC, by quoting the highest premium of US$ 1456 million to be paid to the government over the next 20 years. The net equated annual installment in present value at a discount rate of 10% terms would work out to be around US$ 682 million for a period of 20 years. Also, US$ 170.25 million subsidy has been waived off from both the Centre and State governments under Viability Gap Funding scheme. In absence of bidding details of individual stretches, we have assumed premium and viability gap funding support to be equally distributed accross the 3 stretches (that is premium of US$227.3 million and VGF support of US$56.7 million for the Halol-Shamlajistretch). After winning the tender for the three projects, L&T created a separated special purpose vehicle for executing each of the three highway projects (L&T Ahmedabad Maliya Tollway Pvt Ltd, L&T Rajkot Vadinar Tollway Pvt Ltd, and L&T Halol Shamlaji Tollway Pvt Ltd). Under the contract, L&T Halol Shamlaji Tollway Pvt Ltd was to recover the capital costs and operating costs including returns through tolling during the term of concession. No other details of bidding were available at the time of collection of this information. The concession agreement for the entire package was signed in September 2008. The capital cost of the project (all 3 stretches) at the time of signing of concession agreement was estimated at US$ 1009 million. The Halol-Shamlaji stretch was expected to cost US$ 473.4 million. Financing for L&T Halol Shamlaji Tollway Pvt Ltd was under progress as of December 2009. Construction on the project stretches began in September 2008 and was expected to be completed by end of 2011.