MBL Highway Development Company Limited

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On 9th September 2011, Madhya Pradesh Road Development Corporation (MPRDC) signed a 30-year concession (including construction period of 1.5 years) with MBL Infrastructures Limited for the strengthening, improvement, two-laning, operation and maintenance, and tolling of 75.6kms of Seoni to Katangi section of SH-54 start from Ganesh Chowk Km. 1.5 of SH-26 to Km 51.4 (Seoni district) and Km 51.4 or 0.10 to 24.10 (in Balaghat district) on SH-54 (MP-Maharashtra Border), in the state of Madhya Pradesh. Under the contract, MBL was responsible for the design, construction, finance, operation and maintenance,strengthening and widening the existing carriageway to 2-lane road with granular shoulders. The scope would include 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 MPRDC Highway Development Program, was expected to ease traffic congestion and give significant stimulus to trade and commerce in the entire region.The project road is used for transportation of manganese, coal and other minerals extracted in the nearby mines, items like herbs, teak, sal etc. from nearby forests, and agricultural products amongst others. The road was also used by tourists visiting nearby attractions like Pench National Park or Kanha National Park. MBL Infrastructures Limited established MBL Highway Development Company Limited on 23rd August 2011, a special purpose vehicle, to implement the project. The SPV won the tender through international competitive bidding, conducted by MPRDC, by requesting for the lowest upfront subsidy (viablity gap funding) of US$ 11.9mn (INR 595mn @50 INR/USD). Under the contract, the SPV was to recover the capital costs and operating costs including returns through tolling during the term of concession. The project attained financial closure on 21st February 2012. The grant/debt/equity ratio of the project was 25/54/21. The estimated capital cost of the project at the time of financial closure was US$ 48.1mn (INR 2405.9mn @50 INR/USD). Apart from viability gap funding (grant) of INR 595mn (Central Government - INR 305mn, and Govt of Madhya Pradesh - INR 290mn), financing comprised of external commercial borrowing (ECB) loans of US$ 26mn (INR 1300mn @50 INR/USD) and sponsor equity of US$ 10.2mn (INR 510.9mn).The ECB debt was arranged by London branches of Bank of Baroda and Punjab National Bank. The Appointed Date of the project was February 21, 2012. 90 percent of the total land requirement had been handed over to the concessionaire. However, land acquisition for around 13.829 hectares was still pending and the process was underway. It was understood that construction works had commenced at the time of collection of this information and completion was scheduled by February 2014.