Valecha Badwani Sendhwa Tollways Limited

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In 2011, Madhya Pradesh Road Development Corporation (MPRDC) signed a 15-year concession with Valecha Engineering Limited (VEL) for the strengthening, improvement,two-laning, operation and maintenance,and tolling of 56.88kms of existing major district road- Badwani-Palsood- Sendhwa section of State Highway No.39 from Km 1.00 to Km 57.00,in the state of Madhya Pradesh. Under the contract, VEL was responsible for the design, construction,finance, operation and maintenance,strengthening and widening the existing 2-lane carriageway to 2-lane divided carriageway.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 MDR (major district roads) development project, was expected to ease traffic congestion and give significant stimulus to trade and commerce in the entire region. VEL established Valecha Badwani Sendhwa Tollways Limited (VBSTL),a special purpose vehicle in April 2011, to implement the project. The SPV won the tender through international competitive bidding, conducted by MPRDC,by requesting the lowest annuity payment of US$ 2.1mn (INR 99.4mn). 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 INR 49.7mn from MPRDC as well as tolling, during the term of concession. VEL would execute the EPC for the project. The concession agreement for the project was expected to be signed in 2011. Because of lack of information, it is assumed to be December 2011. The project was expected to be financed with a debt/equity ratio of 75/25. The estimated capital cost of the project at the time of financial closure was US$ 21.3mn (INR 995.2mn @46.7INR/USD). Financing comprised of a term loan of US$ 15.9mn (INR 745mn) and sponsor equity of US$ 5.3mn (INR 250.2mn). Other details of financing were not known at the time of collection of this information. The project was slated for completion by October 10, 2013, but achieved early completion on July 03, 2012.

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