TN (DK) Expressways Limited

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National Highways Authority of India (NHAI) awarded a 25 year concession to TN (DK) Expressways Limited (TNEL) to upgrade, finance, operate and maintain the 68.125 km section on National Highway Seven (NH-7) between Karur and Dindigul, in the southern state of Tamil Nadu. The project primarily involved four-laning of the existing two lane stretch. The concession term included a construction period of 30 months. The concession agreement between NHAI and TNEL was signed in January 2006. This road upgrade project was part of NHAI’s National Highway Development Project (NHDP) Phase II (or North South Corridor) connecting Srinagar (Kashmir State) with Kanyakumari in Tamil Nadu State. TNEL, a wholly owned subsidiary of Madhucon Projects Limited (MPL), was established exclusively to implement this project. MPL won the project in an international competitive tender, conducted by NHAI, by bidding for the lowest grant of US$ 19 million. India’s highway development policy allowed ‘viability funding’ by NHAI to the tune of 40 percent of the capital costs as grant to the concessionaire, subject to competitive bidding. The total capital cost of the project was estimated at US$ 79.5 million. The project reached financial closure in October 2006. The debt for the project was arranged by SBI. TNEL was to be compensated for the capital and operating costs from the tolls collected during the concession term. Construction work on the project began in October 2006 and was expected to be completed by April 2009. None None