North Bihar Highway Limited

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In July 2010, the National Highway Authority of India (NHAI) awarded a 20 year concession (including construction period of 30 months) to a consortium of BSPCL Infrastructure Limited and C&C Constructions Limited for the strengthening, improvement, two-laning, operation and maintenance of Muzaffarpur-Sonbarsa Section of National Highway-77 (NH-77) between km 2.8 and 89.0 in the state if Bihar. Under the contract, the consortium was responsible for the design, construction,finance, operation and maintenance and strengthening of the existing carriageway to a two-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, culverts, road intersections,interchanges, drains, etc.The expansion project, part of National Highway Development Project Phase - III, was expected to ease traffic congestion and give significant stimulus to trade and commerce in the entire region. The consortium of BSPCL Infrastructure Limited (50%) and C&C Constructions Limited (50%) established North Bihar Highway 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$ 23.2 million (INR 1048 million @ 45 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 524mn from NHAI during the term of concession. The concession agreement was presumed to be signed in January 2011 (though Investor conference dated May 2011 confirms that the "appointed date" for the project was not yet finalised by NHAI. The project attained financial closure in February 2011. The debt equity ratio of the project was 80:20. The estimated capital cost of the project at the time of financial closure was US$ 145.8 (INR 6560 mn @ 45 INR/USD) million. Financing comprised INR 4750mn 14year-9months tenure, INR 500mn 3year term loan and INR 1310mn equity. The INR 4750mn term loan was priced at 10.75% and repayment was in 25 structured semi-annual instalments.The 500mn term loan was priced at 350 basis points above SBI base rate (11.5%). The debt was arranged by SBI Capital Markets Ltd. There were a total of 5 lenders: State Bank of India (INR1500mn), Punjab National Bank (INR650mn), Axis Bank (INR900mn), India Infrastructure Finance Company Ltd.(IIFCL INR900mn), State Bank of Patiala (INR200mn), United Bank of India (INR600mn). Construction on the project began in January 2011 and was expected to be completed by June 2013.