GMR Infrastructure has won a Rs5,700 crore national highway project running from Kishangarh in Rajasthan through Udaipur to Ahmedabad, according to an official of the National Highways Authority of India (NHAI).
This is the single-biggest highway project so far in the country, both in terms of value and length.
The stretch is 555 km-long. This is also the first of the nine planned mega highways. Mega highways are those with a length of over 500 km or costing Rs5,000 crore or more.
The official, requesting anonymity, said GMR offered a negative grant of Rs636 crore to win the toll-based project.
“The negative grant committed by the developer is more than double of the government estimate. That clearly shows the appetite among the private sector for highway projects,” he added. The finance ministry had earlier estimated that the winning bidder may have to shell out a premium of Rs300 crore to bag the project. The concession period in the project is of 26 years.
Negative grant is the money a bidder offers to NHAI to win a contract because it finds potential revenues that encouraging. In case of projects which are otherwise not viable, the NHAI offers up to 40% of the total project cost as viability gap funding.
The second most-preferred bidder for the Kishangarh-Ahmedabad project was a consortium led by GVK Power & Infrastructure, which offered a premium of Rs516 crore. The gap between the prices quoted by the L1 (or the most preferred) and L2 bidders has been widening in recent months owing to increasing competition. Some peg the number of players bidding for such projects at 35-40.
The largest project NHAI awarded before this one was the Rs3,600 crore Ahmedabad-Vadodara section of National Highway-8.
GMR officials confirmed the company has emerged L1 bidder for the project but wouldn’t comment till it received the letter of award (LoA) from NHAI.
GMR has six operational highways and three under development. The company’s scrip closed 1.83% higher at Rs30.65 on the BSE.
NHAI on Friday also awarded the 225 km-long Jabalpur-Katni-Rewa project to Soma Tollway. IL&FS Transportation Networks was the L2 bidder for the Rs1,900 crore highway in Madhya Pradesh.