Raipur Expressways Limited

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National Highways Authority of India (NHAI) awarded a 25 year concession to Raipur Expressways Limited (REL) to upgrade, finance, operate and maintain the 45 km section on National Highway six (NH-6) between Raipur and Aurang, in Chhattisgarh State. The project included four-laning of the existing two lane stretch; construction of two railway overbridges, one major bridge, six minor bridges, one flyover, six underpasses, 19 km long service roads, and three truck laybys. The concession term included the construction period of 30 months. The concession agreement between NHAI and REL was signed in October 2005. This road upgrade project linking the state capital of Raipur with surrounding industrial areas was expected to improve connectivity, decongest traffic and ensure smooth cargo movement. This project was part of NHAI’s National Highway Development Project (NHDP) Phase III A. The objective of NHDP Phase IIIA was to widen (four lane) sections of national highways carrying high volume of traffic, connecting state capitals with the NHDP Phases I and II network and providing connectivity to places of economic, commercial and tourist importance. REL, a special purpose company established to implement this project, was a joint venture between India’s DS Constructions Limited(58.22%), UK based Apollo Enterprises Limited (a DSC Group Company) (40%), John Laing International Limited (1.25%) and Laing O’Rourke Plc (0.50%) . The DS-Apollo consortium won the project in an international competitive tender, conducted by NHAI, by bidding for the lowest grant of US$ 1.7 million (net present value discounted at 10 %). 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$ 63.1 million. The project reached financial closure in December 2006 with a debt of 200 crores (US$44.14 million). The debt was raised by a consortium of banks led by State Bank of Travancore. Debt finance came from Sate Bank of Tranvancore (INR 40 crores), United Bank of India (INR 40 crores), Indian Infrastructure Finance Company (INR 40 crores), State Bank of Patiala (INR 26 crores), State Bank of Mysore (INR 18 crores), State Bank of Hyderabad (INR 18 crores) and State Bank of Indore (INR 18 crores). The remaining US$17.28 million was equity. REL was to be compensated for the capital and operating costs from the tolls collected during the concession term. Construction work on the project began in April 2006 and was expected to be completed by January 2009.