The Indian Rail Construction (Ircon), Larsen and Toubro ( L&T) and the UP Bridge Corporation have emerged as bidders for the engineering procurement construction (EPC) contract of the Rs 85 crore Moradabad bypass project.
This if for the first time that the UP Bridge Corporation and Ircon have bid for a large build-operate and transfer (BoT) project. L&T already has two large road projects - the second Narmada bridge and the Coimbatore bypass project.
In both these projects, L&T itself is the EPC contractor. Ircon also has a series of small projects along the state highways in Maharashtra, essentially road over-bridges.
Sources said that these were only on the prequalification bids based on the technical benchmarks.
The EPC contractors are expected to pick up an equity stake of about 5 per cent of the project costs or 15 per cent of the equity of the special purpose company - Moradabad Toll Road Company Ltd.
The major portion of the equity is to be held by the National Highways Authority of India (NHAI)
The project is expected to be funded on a 70:30 debt equity ratio, effectively implying that the EPC contractors would have to bring in at least about Rs 4 crore by way of equity.
The balance of Rs 21.7 crore is to be held by the NHAI and SBI Caps.
Tenders for the project were invited about three weeks ago by the NHAI, who have retained SBI Caps as financial advisors.
The sources said that SBI Caps has advised the NHAI to divest from the project during the operation and maintenance phase so as to create a benchmark in the financial markets for such divestments either by private sector BoT operators or by the NHAI.
The Moradabad bypass project is expected to be a showcase road project replete with access control, underpasses to allow unhindered traffic flow along National Highway Number 24.
The sources said that once the EPC contracts were finalised, the project was expected to go into financial closure.
The project is expected to be tentatively completed by the year 2000.
The divestment from the project is expected to strengthen NHAI's guarantee corpus depending on the pricing and valuation of the project equity.
Currently, there are no listed or unlisted equity of road projects which implies that any valuation of the project would have to be done either on the basis of the discounted cash method or on the basis of the net tangible asset value method.
The project had initially been proposed as an annuity based project allowing for a fixed income flow to the BOT operators. Subsequently, NHAI decided to go ahead with the project on a direct tolling basis.
