Salem Tollways Limited

active

In January 2006, National Highways Authority of India (NHAI) signed a 20 year concession contract with Salem Tollways Limited (STL) for the upgrade, operation and maintenance of the 54 km stretch on National Highway 47 (NH-47), between Salem and Kumarapalayam, in the southern state of Tamil Nadu. Under the agreement, STL was required to design, finance and widen the existing two-lane stretch to a four lane highway with paved shoulders in return for the right to collect tolls during the concession term. STL was also responsible for the construction of nearly 33 km of service roads on both sides of the highway, three bypass stretches, 12 minor bridges, two railway overbridges, three flyovers, six underpasses, 17 bus stops and other wayside amenities. The concession term included the construction period of 30 months. This road upgrade project was expected to ease traffic congestion and give significant stimulus to trade and commerce in the entire region. STL, a wholly owned subsidiary of India’s IVRCL Infrastructures & Projects Ltd. (IVRCL), was established exclusively to implement this project. IVRCL won the concession in an international competitive tender conducted by NHAI by making the lowest subsidy request in the amount of US$ 28.5 million. The total capital cost of the project was estimated at US$ 110.6 million. The project reached financial closure in September 2006. The project was financed through a combination of equity (US$ 17.7 million), debt (US$ 64.5 million) and a grant from NHAI (US$ 28.5 million). The debt was arranged by Infrastructure Development Finance Company Limited (IDFC). Construction work on the project began in September 2006 and was expected to be completed by March 2009. None None