L&T Sambalpur Rourkela Tollway Limited

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On 5th October 2013, Government of Orissa (through Odisha Works Department) awarded a 22-year concession (including 3 years of construction period) to L&T IDPL for the strengthening, improvement, 4-laning,operation and maintenance,and tolling of 161.737kms of Sambalpur-Rourkela section of State Highway-10 (SH-10) from km 4/900 to km 167.900,in the state of Orissa. Under the contract, L&T was responsible for the design, construction, finance, operation and maintenance,strengthening and widening the existing 2-lane highway 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 expansion project,part of the State Highway Development Program, was expected to ease traffic congestion and give significant stimulus to trade and commerce in the entire region. Major companies located in the vicinity of the road were Rourkela Steel Plant, L&T Kansbahal Works, UltraTech Cement, Vedanta Aluminum, Bhushan Power and Steel and large areas of coal mines of Coal India Limited. L&T established L&T Sambalpur Rourkela Tollway Limited (SRTL),a special purpose vehicle, to implement the project. The SPV won the tender through international competitive bidding, conducted by OWD, by requesting the lowest upfront subsidy of US$ 76.3mn (INR 4653mn @61 INR/USD). Government of India had already sanctioned the grant of INR 2585.1mn, and the balance of INR 2067.9mn will be provided by the State Government of Orissa, for this project. According to the provisions under the Concession Agreement for disbursement of Grant, INR 2585.1mn would be disbursed during the construction period and balance INR 2067.9mn would be disbursed during the Operations period (over four years at INR 517mn per annum).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 8th November 2013. The project attained financial closure on 6th May 2014. The estimated capital cost of the project at the time of financial closure was US$ 281.6mn (INR 17177.3mn @61 INR/USD). Apart from the upfront grant of US$ 76.3mn (INR 4653mn), financing comprised a 15-year term loan of US$ 166.6mn (INR 10164mn), and sponsor equity of US$ 47.5mn (INR 2900.3mn). As per the terms of the concession agreement, the sponsor equity contribution couldn't be less than the GoI VGF (INR 2585.1mn) and that unsecured debt couldn't form part of equity. The term loan had a repayment schedule of 132 monthly installments. The participating banks were Canara Bank (3000mn), IndusInd Bank (4000mn), L&T Infrastructure Finance (2664mn), Vijaya Bank (500mn). The construction for the project was started in July 15, 2014 (Appointed date) and was expected to be operational by July 15, 2017. About 91% of the land requirement had been provided at the time of Appointment date.