Navayuga Quazigund Expressway Private Limited

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In April 2010, the National Highway Authority of India (NHAI) awarded a 20 year concession (including construction period of 5 years) to a consortium of Navayuga Engineering Company Limited and Krishnapatnam Port Company Limited, for the strengthening, improvement, 4-laning, operation and maintenance of 15.25 kms of Quazigund Banihal Section of National Highway-1A (NH-1A), from km 189.350 to km 204.700 of 1A, including 2 Tunnels (2 lanes) of 0.69 km & 8.45 km length in the state of Jammu & Kashmir. Under the contract, the consortium was responsible for the design, construction, finance, operation and maintenance and strengthening of the existing carriageway to a 4-lane highway with paved shoulders. The scope will include construction of new pavement, rehabilitation of existing pavement, construction and/or rehabilitation of major and minor bridges, tunnels, viaducts, culverts, road intersections, interchanges, drains, etc.The project will have two parallel tunnels of 8.5 kms each.Each of the tubes will have a 7-m carriageway, which is adequate for two lanes, but traffic will be allowed on only on one lane.The other lane will be set aside for emergency.The existing stretch on NH-1A in this corridor has blind curves, steep gradient and vehicles - with more than 8-tonne loads-are not allowed. The entire mountainous stretch between these two points sees frequent slope failures, rock falls and avalanche. NH-1A connects Jammu with Srinagar. The tunnels will reduce the distance between the two towns by almost 51km, lessening the travel time by at least five hours. The tunnels will not only make the journey less risky, but will also help boost tourism in the border state. The consortium of Navayuga Engineering Limited (51%) and Krishnapatnam Port Company Limited (49%, KPCL was a subsidiary of Navayuga Group), established Navayuga Quazigund Expressway Private Limited, a special purpose vehicle, to implement the project. The SPV won the tender through international competitive bidding, conducted by NHAI, by requesting the lowest fixed annuity of US$ 108.9 million (INR 4900 million @ 45 INR/USD). 9 developers were shortlisted out of which only 3 bid for the project. The L2 bid of INR 3334million (semi annual annuity) was by SREI consortium. Under the contract, the SPV was to recover the capital costs and operating costs including returns through fixed semi-annual payment of INR 2450mn from NHAI during the term of concession. The project attained financial closure on 1st January 2011.The estimated capital cost of the project at the time of financial closure was US$ 558.6 (INR 25135.8 mn @ 45 INR/USD) million. The Debt/Equity ratio was 80/20. Financing comprised INR 19310 mn 15year term loan, INR993.5mn Bank Guarantee, and INR 4831.5mn sponsor equity. The INR 19310mn term loan had a repayment schedule of 37 quarterly installments.The particpating banks were Andhra Bank(1670mn),Bank of India(850mn),Central Bank of India(1750mn), Corporation Bank (1590mn),India Infrastructure Finance Co Ltd(3750mn), Oriental Bank of Commerce(850mn),Punjab National Bank(3000mn), State Bank of Hyderabad (850mn),State Bank of India(5000mn). Reserve Bank of India documents lists an ECB borrowing amounting to US$ 40million (tenor of 6-years 9-months) in December 2010 by Navayuga Quazigund Expressway Private Limited, however it could not be ascertained whether the INR 19310mn debt syndication noted above had any ECB component or whether any part of the INR 19310mn Term loan has been refinanced by way of cheaper USD loans. Construction on the project began in January 2011 and was expected to be completed by January 2016.