Solapur Bijapur Tollway Private Limited

Cancelled

In March 2012, the National Highway Authority of India (NHAI) awarded a 20-year concession (including construction period of 30 months) to Sadbhav Engineering Limited for the strengthening,improvement, four/six-laning,operation and maintenance, and tolling of 110.542 kms of Solapur-Bijapur section from km. 0.00 to km. 110.542 of National Highway-13 (NH-13) in the states of Maharashtra (35kms) and Karnataka (75.542km). Under the contract, Sadbhav Engineering was responsible for the design, construction, finance, operation and maintenance and strengthening of the existing 2-lane carriageway to a four/six-lane highway with paved shoulders. The scope included construction of 4/6-lanes including construction of new pavement, rehabilitation of existing pavement, construction and/or rehabilitation of major and minor bridges, culverts, service roads, road intersections, interchanges, toll plaza, tunnel section, etc.The expansion project, part of National Highway Development Project Phase-III will ease traffic congestion, particularly heavy traffic, plying between Solalpur and Bijapur and give significant stimulus to trade and commerce in the entire region. Sadbhav Engineering Limited established Solapur Bijapur Tollway Private Limited (SBTPL), a special purpose vehicle, to implement the project. The SPV won the tender through international competitive bidding, conducted by NHAI, by quoting the highest annual premium. The SPV would pay to NHAI a sum of US$15.1mn (INR 756mn @50 INR/USD) in the first year of operations, with 5% increase in each subsequent year (This amounts to an NPV payout of about US$ 185.1mn over the concession period of 20 years at a discount rate of 10%). There were 38 pre-qualified bidders at the RFQ stage. Under the contract, the SPV was to recover the capital costs and operating costs including returns through tolling during the term of concession. The EPC contract for the project had been awarded to Sadbhav Engineering Limited. The concession agreement was signed on 17th April 2012. The project attained financial closure on 5th February 2013. The debt/equity ratio for the project was 74/26. The estimated capital cost of the project at the time of financial closure was US$ 201.9mn (INR 11836mn @58.6 INR/USD). Financing comprised of a 20-year term loan of US$ 146.4mn (INR 8758.6mn) and sponsor equity of US$ 52.5mn (INR 3077.4mn). The term loan had a repayment schedule of 174 monthly installments.The debt was co-arranged by Bank of India (4379.3mn) and IndusInd Bank (4379.3mn). Construction on the project was expected to began in February 2013 and was expected to be completed by August 2015. By August 2013, SBTPL had acquired 65% of the total land required. SBTPL was planning to commence construction by January 2014 subject to having received environment and forest clearances. While SBTPL expected to get a go ahead from the Ministry of Environment & Forest (MoEF) by November 2013, forest clearance was expected by December 2013. However, since NHAI failed to get the necessary clearances, so as per Clause 37.2.2 of the concession agreement, SBTPL opted to terminate the agreement in December 2013. NHAI had provided its approval for the foreclosure without any claims/damages or debarring the concessionaire for future NHAI projects.