Orissa Steel Expressways Private Limited

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In April 2010, the National Highway Authority of India (NHAI) awarded a 19 year concession (including construction period of 30 months) to a consortium of SREI Infrastructure Finance Limited (SREI),MBL Infrastructures Limited (MIL),AMR Construction Limited (AMR),Ritwik Projects Private Limited (RPPL), for the strengthening,improvement, 4-laning, operation and maintenance of 96kms of Rimuli-Roxy-Rajamunda section (from KM 163.000 to KM 259.453) and of National Highway-215 (NH-215) in the state of Orissa. 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 includes strengthening & maintenance of existing carriageway including construction of 3 railway-over-bridges, 8 major bridges, 36 minor bridges and 16 vehicular/pedestrian underpasses, etc.The project will be undertaken in 2 phases. The phase-I of the project comprised 4-Laning of Rimuli-Roxy-Rajamunda section of NH-215 from 163.000 Km to 247.600 Km (84.600 Km) and 2-Laning from 247.600 Km to 259.453 Km (11.853 Km).The phase II of the project comprised 4-Laning of the remaining 2-Lane stretch from 247.600 Km to 259.453 Km (11.853 Km). The expansion project, a part of National Highway Development Project Phase -III, was an important corridor for movement of coal, minerals and ore. The project anchor points (traversing about 96 Km) connects the two important mining hubs of Orissa Viz. Sundargarh and Kendujhar (important due to Barbil, Culta and Metso mines). The consortium of SREI Infrastructure Finance Limited (SREI),MBL Infrastructures Limited (MIL),AMR Construction Limited (AMR),Ritwik Projects Private Limited (RPPL),established a special purpose vehicle, Orissa Steel Expressways Private Limited, to implement the project. The SPV won the tender through competitive bidding, conducted by NHAI,by quoting the lowest upfront subsidy from NHAI of US$48.9mn (INR 2299.5mn @47 INR/USD).Under the contract, the SPV was to recover the capital costs and operating costs including returns through tolling during the term of concession.OSEPL has entered into a lump-sum fixed-price EPC Agreement with the joint venture of RPPL,AMR and MIL to undertake the EPC activity of Phase I of the project. The concession agreement was signed on July 6th, 2010. The project attained financial closure on 30th July 2011. The grant/debt/equity ratio of the project was 29.8/52.7/17.5. The estimated capital cost of the project (phase-I and II) at the time of financial closure was US$ 164.4mn (INR 7726.5 mn @ 47 INR/USD) million. Apart from the NHAI subsidy, financing comprised INR 4070mn 15year 6months term loan,and INR 1357mn sponsor equity. The INR 4070mn term loan had a repayment schedule of 48 quarterly instalments and was priced at 225bps over prime lending rate of Union Bank of India.The debt was arranged by Union Bank of India. The participating banks were Union Bank of India,State Bank of India (950mn),Allahabad Bank (720mn), Bank of India (950mn),Vijaya Bank (470mn). The sponsors had extended joint and several undertaking to arrange for funds in the event of any short fall in means of finance and project cost overrun. The estimated debt requirement of INR 624.1mn pertaining to Phase II was proposed to be tied-up during Q1FY18 as the same was scheduled to completed by the eighth anniversary of appointed date (yet to be confirmed by NHAI) as per the concession agreement. Construction on the project began in October 2011 and was expected to be completed by April 2014.