North Karantaka Expressway Limited

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The National Highway Authority of India (NHAI) awarded a 17.5 year concession contract to North Karantaka Expressway Limited (NKEL) in November 2001, to strengthen and widen the 77 km stretch of NH-4 running through the state of Karnataka. The scope of the work included converting the existing 77 km two-lane stretch to four-lane, building six major bridges, twelve minor bridges, 158 culverts, and 69 km of service roads. The 17.5 year contract term included the construction time of 30 months. Under the contract, NKEL was compensated for the capital costs and operating costs including returns by way of a fixed semi-annual payment (annuity) from the NHAI during the operation period of 15 years. Under the annuity scheme, the private operator does not collect tolls from the users of the facility. NKEL was joint venture between private Indian firm Punj Lloyd Limited (42 %), Infrastructure Leasing & Financial Services Limited (42 %), and Consolidated Toll Network India Private Limited (16%). NKEL won the competitive tender conducted by NHAI by requesting the lowest annuity amount of US$ 10.6 million. The total cost of the project was estimated at US$ 123 million. The project reached financial closure in December 2001, with a debt equity ratio of 3:1. The loan was arranged by a consortium of 12 banks led by Punjab National Bank. The financing structure was equity of Rs. 1005.81 million, Subordinate Debt of Rs 350.00 million, and Senior Debt of Rs. 4067.42 million Construction began in February 2002 and the roads were expected to be operational by December 2004. Karina advised to enter the annuity amounts as government cash support. None