Sindhanur Gangavathi Tollway Private Limited

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On 24th August 2012, Karnataka Road Development Corporation Limited (KRDCL on behalf of PWD) signed a 24-year concession (including 2 years of construction period) with GKC Projects Limited for the strengthening, improvement,two-laning,operation and maintenance,and tolling of 83kms of Sindhanur-Gangavati-Ginigera section of State Highway-23 (part of NH-63) from km 79/000 to km 161.990,in Raichur district in the state of Karnataka. Under the contract, GKC was responsible for the design, construction, finance, operation and maintenance,strengthening and widening the existing 2-lane carriageway to 2-lane divided carriageway (3m wide).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 the State Highway Development Program (through KRDCL), was expected to ease traffic congestion and give significant stimulus to trade and commerce in the entire region. These roads were used by mining companies to transport iron ore to ports. GKC Projects Limited established Sindhanur Gangavathi Tollway Private Limited (SGTPL),a special purpose vehicle, to implement the project. The SPV won the tender through international competitive bidding, conducted by KRDCL,by requesting the lowest upfront subsidy of US$ 6.2mn (INR 380.3mn @61 INR/USD). Government of India had already sanctioned in-principle the grant for this project. 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 10th February 2014. The estimated capital cost of the project at the time of VGF approval (as per Gov of India records) was US$ 31.2mn (INR 1901.6mn @61 INR/USD). However the details of financial closure indicate a 16-year term loan of US$ 29.5mn (INR 1800mn) and details of sponsor equity were not available at the time of collection of this information. The term loan had a grace period of 1-year 3-months and a repayment schedule of 52 quarterly installments. IDBI Bank (500mn) was the lead arranger and the other participating banks were Canara Bank (500mn), India Infrastructure Finance Co Ltd (400mn), Syndicate Bank (400mn). The construction for the project was started in January 2014 (Appointed date) and was expected to be operational in December 2015.