Financial Daily from THE HINDU group of publications
Friday, Jan 04, 2002
Logistics - Roadways
Karnataka highway project achieves financial closure
NEW DELHI, Jan. 3
THE country's first national highway project under the annuity scheme of National Highway Authority of India (NHAI) has successfully managed to achieve financial closure.
The project in question is the Belgaum-Maharashtra border stretch on NH-4 being executed by North Karnataka Expressway Private Ltd (NKEPL), a joint venture between Consolidated Toll Network Ltd - the surface transport arm of IL&FS - and Punj Lloyd Ltd (PLL).
The highway project, backed by IL&FS, achieved financial closure on December 31 in a record time of 45 days from the signing of the agreement.
This is primarily on account of the significant reduction in the risk involved in the project as, under the annuity scheme norms, NHAI has undertaken payment of a fixed semi-annual amount over the concession period of 15 years to the private partner.
The project, costing Rs 525 crore, is being financed by a consortium of 12 leading nationalised banks, which have together extended secured term loans worth Rs 406.40 crore.
While the unsecured loan component is Rs 35 crore, the debt-equity ratio of the project has been pegged at 3:1, according to NKEPL sources.
The leader of the banking consortium, Punjab National Bank (PNB), has been assigned the management and supervision of finalisation of documents and security arrangements for the project.
IL&FS, which has a 42 per cent stake in NKEPL, has assumed the role of project developer and financial advisor.
PLL and CTNL, the other two joint venture partners, have equity holding of 42 per cent and 16 per cent respectively in NKEPL.
The project essentially involves strengthening and widening of a 77-km stretch of NH-4 running through Karnataka on a build-operate-transfer (BOT) basis.
The scope of work includes the building of four major bridges, six minor bridges, 122 culverts, service roads, trucks and lay-byes, wayside amenities and a toll plaza.
As per the agreement entered into on November 20 last year, NKEPL will take the responsibility of designing, financing, building and maintaining the road over a concession period.
This includes a 30-month construction period beginning February 2002 and a 15-year maintenance period.
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