Srinagar Sonamarg Tunnelway Limited

active

In August 2013, Border Roads Organisation (BRO) awarded a 20-year concession (including construction period of 5 years) to a consortium of Soma Enterprises Limited and ILFS Transportation Networks Limited (ITNL), for building and operation and maintenance of 6.5 kilometer tunnel with 6kms approach roads, between Gagangir and Sonamarg in Ganderbal district of Jammu & Kashmir. Under the contract, the consortium was responsible for the design, construction, finance, operation and maintenance,of a 2-lane divided carriageway.The scope included construction of new pavement.The expansion project was part of mega road communication project to ensure undisrupted connectivity between Kashmir and Ladakh. The areas beyond Z-Morh including Sonamarg and Ladakh region, generally remain cut off from Kashmir for over six months owing to heavy snowfall during winters. Z-Morh tunnel was being constructed around 22 kilometers ahead of Zojilla tunnel The two-lane, 10 metre-wide tunnel would include an egress of 3.5 metres to be used in emergency. The tunnel, located 2637 metres above sea level, would ensure the passage of 1000 vehicles an hour at an approved maximum speed of 80 km per hour. The consortium of Soma Enterprises Limited (51%) and ILFS Transportation Networks Limited (49%), established Srinagar Sonamarg Tunnelway Limited (SSTL),a special purpose vehicle on 9th April 2013, to implement the project. (On 5th June 2014 IL&FS Transportation Networks increased its equity stake from initial 14.5% to 49%). The SPV won the tender through international competitive bidding, conducted by BRO,by requesting the lowest annuity payment of US$ 76.9mn (INR 4694mn). Other details of bidding were not known at the time of collection of this information. Under the contract, the SPV was to recover the capital costs and operating costs including returns through semi-annual payments of US$ 38.5mn (INR 2347mn) from BRO, during the term of concession. The concession agreement for this project was signed in April 2014. The project attained financial closure in August 2014. The debt/equity ratio of the project was 72/28. The estimated capital cost of the project at the time of financial closure was US$ 539.2mn (INR 32890mn @61 INR/USD). Financing comprised of 17-year 3-months term loan of US$ 387.4mn (INR 23630mn) and sponsor equity of US$ 151.8mn (INR 9260mn). The term loan had a repayment schedule of 24 semi-annual installments. The loan was arranged by ICICI Bank. The project construction was expected to start in August 2014 and operation was expected to start by August 2019.