Salasar Highways Private Limited

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On 26th November 2012, the National Highway Authority of India (NHAI) awarded a 30-year concession (including construction period of 910 days or approximately 2.5-years) to Galfar Engineering and Contracting SAOG of Oman (Galfar) for the strengthening, improvement, 2-laning, operation and maintenance, and tolling of 154.141kms (from KM0.0 to KM154.141) of Rajasthan Border-Salasar section of National Highway-65 (NH65),in the state of Rajasthan. Under the contract, Galfar was responsible for the design, construction, finance, operation and maintenance and widening of the existing carriageway to a 2-lane highway with paved shoulders, with a provision to augment capacity at a later date. The scope included 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-IV would ease traffic congestion and give significant stimulus to trade and commerce in the entire region. Galfar established Salasar Highways Private Limited (SHPL), a special purpose vehicle, to implement the project. The SPV won the tender through international competitive bidding, conducted by NHAI, by requesting the lowest upfront subsidy of US$ 24.2mn (INR 1420mn @58.6 INR/USD). Out of the 32 pre-qualified bidders, only 2 developers participated in the final bid. Under the contract, the SPV was to recover the capital costs and operating costs including returns through tolling during the term of concession. The project attained financial closure on 12th November 2013. The grant/debt/equity ratio for the project was 23.5/59.5/17. The estimated capital cost of the project at the time of financial closure was US$ 103.2mn (INR 6047.3mn @58.6 INR/USD). Apart from viability gap funding (grant) of INR 1420mn, financing comprised of a 10-year term loan of US$ 61.4mn (INR 3600mn) and sponsor equity of US$ 17.5mn (INR 1027.3mn). The term loan had a grace period of 6-months and repayment schedule of 78 monthly installments.The debt was arranged by Union Bank of India and the participating banks were Canara Bank (INR 1000mn), and Bank of India (1000mn). Construction on the project was expected to begin in November 2013 and be completed by May 2015.