Rohtak Panipat Tollway Private Limited

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In January 2010, the National Highway Authority of India (NHAI) awarded a 25 year concession (including construction period of 910 days) to Sadbhav Engineering Limited for the strengthening, improvement, 4-laning, operation and maintenance, and tolling of 80.86kms of Rohtak to Panipat Section of NH-71A in the state of Haryana. Under the contract, Sadbhav Engineering was responsible for thedesign, construction, finance, operation and maintenance and widening of the existing carriageway to a 4-lane highway with paved shoulders. The scope would 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 would ease traffic congestion and give significant stimulus to trade and commerce in the entire region. Sadbhav Engineering Limited established Rohtak Panipat Tollway Private Limited (RPTPL) on 25th January 2010, a special purpose vehicle, to implement the project. The SPV won the tender through competitive bidding, conducted by NHAI,by quoting the highest premium payment to NHAI. The SPV would pay NHAI a sum of US$ 9mn (INR 450mn @50 INR/USD) in the first year of operations with 5% increase in each subsequent year (This amounted to an NPV payout of US$ 128.5mn over the concession period at a discount rate of 10%). As per the concession agreement the premiums would be paid in monthly installments. Under the contract, the SPV was to recover the capital costs and operating costs including returns through tolling during the term of concession. Traffic toll rates would be subject to annual revision and are partially linked to the wholesale price index (WPI). Sadbhav Engineering Limited was also the EPC Contractor of the project. The concession agreement was signed on 9th March 2010. The project attained financial closure in April 2011 (specific details couldn't be ascertained). 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$ 242.7mn (INR 12134mn @ 50 INR/USD). Financing comprised of a 16-year term loan of US$ 194.1mn (INR 9707.2mn) and sponsor equity of US$ 48.5mn (INR 2426.8mn). The INR 9707.2mn term loan had a moratorium of 22 quarters and a repayment schedule of 43 quarterly installments henceforth so that the door-to-door maturity was 16 years. The loan was priced at 12.75% with annual resets. The debt was arranged by Punjab National Bank. RPTPL has recently swapped an INR 2025mn (about USD 38mn) equivalent of domestic loans with a USD-based external commercial borrowing at an interest rate linked to USD LIBOR to save on interest costs. RPTPL has covered the variation in USD LIBOR with an interest rate swap with the facility provider, where RPTPL will pay a fixed interest rate for the tenor of the loans. At the end of the seventh year, the loans will be automatically swapped back and merged with the existing domestic loans. Exchange rate risks on the principal amount and on the interest costs have been managed by exchange rate derivatives which provide protection from INR depreciation within a specific band agreed with the counterparty. Construction on the project was scheduled to be completed by October 2013. The Appointed Date for the project from NHAI was April 2011. According to the Lenders' Engineer's report of June 2012, the company has achieved a physical progress of 59% and the SPV was expecting to achieve the COD by November 2012.