L&T Western Andhra Tollways Limited

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In October 2005, National Highways Authority of India (NHAI) awarded a 20 year concession contract to India’s Larsen and Toubro Limited (L&T) to upgrade, operate and maintain the 56 Km stretch on National Highway number seven (NH-7), between Jadcherla and Kothakota, in Andhra Pradesh State. Under the contract, L&T was required to design, finance and widen the existing two-lane stretch to a four lane divided highway in return for the right to collect tolls during the concession term. In addition, the project included the construction of one railway overbridge, five major bridges, a bypass to Jadcherla town, two flyovers, toll plaza and other wayside amenities. The 20 year concession term included the construction period of 30 months. The Jadcherla Kothakota toll road project, awarded under National Highway Development Program – Phase II, formed the important link in the Hyderabad-Bangalore corridor. The road expansion was expected to ease traffic congestion and give significant stimulus to trade and commerce in the entire region. L&T Western Andhra Tollways Private Limited (L&T-WATPL) was a special purpose company created by L&T to exclusively implement this project. The concession agreement between NHAI and L&T-WATPL was signed in January 2006. L&T won the concession by requesting the lowest subsidy/grant in an international competitive tender conducted by NHAI. The amount of subsidy requested was estimated to be US$11 million. The total capital cost of the project was estimated at US$ 90 million. The project reached financial closure in August 2006. IDFC was the lead arranger of the US$ 57.9 million debt. Construction work on the project began in August 2006 and was expected to be completed by February 2009.The company achieved the Commercial Operation Date (COD) for the project on March 13, 2009 as against the scheduled date of February 20, 2009; however, this delay was mainly due to the unavailability of the land in the project stretch and did not result in any cost overrun for the company.