IRB Infrastructure Ltd has emerged as the preferred bidder for Rs 1,500 crore highway development contract for four-laning of the 98.7 km stretch between Solapur and Yedeshi in Maharashtra from the National Highways Authority of India (NHAI).
A senior NHAI official said, “With the drying up of appetite for the toll-based projects in the last one year, the government had skewed its contract awards towards normal engineering, procurement construction (EPC) basis. Projects like this give an opportunity for asset development in addition to the growth in size for developers.”
The toll project, coming after a gap of almost a year, will be developed on a design build finance operate and transfer model by IRB.
IRB has sought a viability gap funding (VGF) of Rs 189 crore — about 12% of the capital cost of the project — from the NHAI.
In the toll model of the highway funding, the government offers VGF, or upfront grant, to developers, capped at 40% of the project cost. The developer raises the remaining amount in a 60:40 debt equity ratio.
IRB plans to develop the Solapur-Yedeshi section in 910 days. The concession period for this project is 29 years, which means IRB will retain the right on toll revenues from the project for 29 years before transferring the asset to the government.
This project will add up to the companies’ present construction order book of Rs 5,050 crore, which is to be executed in the next two to three years.
The company has 18 toll projects, of which 16 are operational.