Global biggies join race for first mega highway project

Hindustan Construction Company, Larsen & Toubro, Tata Infrastructure, and IRB Developers are vying to bag India’s first mega highway project spanning 555 kilometres from Kishangarh in Rajasthan, through Udaipur in the state up to Ahmedabad in Gujarat.

The project cost is estimated at Rs5,700 crore.

According to finance ministry calculus, the winning bidder may have to shell out a premium of Rs300 crore.

Premium, or negative viability gap funding (VGF), is the amount of money a winning bidder pays the government to get a project.
The concept is that despite the payment, the project remains viable.

In projects where the returns may not be commensurate with investment, the government chips in with VGF but this amount is capped at 40% of the total cost of the project.

Transport ministry officials, however, said given the number of companies shortlisted, the premium for the mega highway will be more.

“Eleven consortia have been shortlisted. Considering the competition recently seen for build-operate-transfer, or BoT, projects (where toll is the source of revenue for the developer), we hope to get a premium of Rs450-500 crore,” said a ministry official.

Both global as well as domestic majors have evinced interest.
Others shortlisted include the Isolux-Soma consortium, First Pacific (based in Bermuda, West Indies), a joint venture between GVK and Belford, Tata Infrastructure, IJM of Malaysia, a consortium led by Nagarjuna Construction, Leighton of Australia, and GMR.

Hindustan Construction is jointly bidding with Vinci of Italy, while IRB will tag along with Reliance Infrastructure.