MBL (MP) Toll Road Company Limited

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On 14th November 2011, Madhya Pradesh Road Development Corporation (MPRDC) awarded a 15-year concession (including construction period of 1.5 years) to MBL Infrastructure Limited for the strengthening, improvement, two-laning, operation and maintenance of 18.303 kms of Waraseoni-Lalbarra Road section of MDR roads in Balaghat District, 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. The scope includes 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 MPRDC Highway Development Project, was expected to ease traffic congestion and give significant stimulus to trade and commerce in the entire region. MBL Infrastructure Limited established MBL (MP) Toll Road Company Limited on 31st October 2011, a special purpose vehicle to implement the project. The SPV won the tender through international competitive bidding, conducted by MPRDC, by quoting the lowest fixed annuity of US$ 1.3mn (INR 65.2mn @50 INR/USD). Under the contract, the SPV was to recover the capital costs and operating costs including returns through fixed semi-annual payment of INR 32.6mn from MPRDC as well as through tolling during the term of concession. MBL would execute the EPC for the project. The concession agreement was signed on 7th December 2011. The project is presumed to have attained financial closure in March 2012, based on Annual Reports filed by MBL in March 2012. The debt/equity ratio for the project was 73/27. The estimated capital cost of the project at the time of bidding was US$ 11.1mn (INR 553mn @50 INR/USD). Financing comprised of external commercial borrowing (ECB) loans of US$ 8.06mn (INR 403mn) and sponsor equity of US$ 3mn (INR 150mn). ECB of US$ 8.06 million was sanctioned by the Reserve Bank of India (India's Central Bank) in March 2012. Construction on the project began in March 2012 and was expected to be completed by March 2013.