Nagpur Kondhali Highway Project

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In December 2005, National Highways Authority of India (NHAI) signed a 20 year concession agreement with Balaji Tollways Limited (BTL) for the upgrade, operation and maintenance of the 40.8 km stretch on National Highway six (NH-6), between Nagpur and Kondhali, in the state of Maharashtra. Under the agreement, BTL was required to design, finance and widen the existing two lane Nagpur-Kondhali section of NH-6 to a four lane dual carriageway. The concession term included the construction period of 30 months. BTL was a joint venture between India’s Atlanta Limited (74%) and SREI Infrastructure Finance Limited (24%). BTL won the concession in an international competitive tender, conducted by NHAI, by bidding the lowest subsidy of US$ 12.6 million. India’s highway development policy allowed ‘viability funding’ by NHAI to the tune of 40 percent of the capital costs as grant to the concessionaire, subject to competitive bidding. The total capital cost of the project was estimated at US$ 50 million. The project reached financial closure in August 2006. The project was financed by a combination of equity (US$ 12.8 million), debt (US$ 24.53 million) and NHAI grant (US$ 12.6 million). The debt component was raised from India Infrastructure Finance Company Limited (US$ 9.9 million), SREI Infrastructure Finance Limited (US$ 3.3 million) and Union Bank of India (US$ 8.8 million). BTL was to be compensated for the capital and operating costs from the NHAI grant and the tolls collected during the concession term. BTL was to receive half of the NHAI grant (US$ 6.3 million) during the construction period and the balance was spread out during the remaining concession term. The toll collection commenced after the construction was completed and was for a period of 17.5 years. Construction work on the project began in August 2006 and was expected to be completed by March 2009. None None