Memorandum for PPPAC

(For Final approval)

1 General
Four lanning of Tuljapur - Ausa section of NH-361 from km
0.000 to km 55.835 and Tuljapur Bypass (11.593 km) under
1.1 Name of the Project
NHDP Phase-IV in the State of Maharashtra under NHDP
Phase-IV.
Type of PPP (BOT,
1.2 Hybrid Annuity “DBOT” mode.
BOOT, BOLT, OMT etc.)
State: Maharashtra
Location
1.3 District: Osmanabad, Latur
(State/District/Town)
Towns: Tuljapur, Ausa
Administrative Ministry of Road Transport and Highways, Government of
1.4
Ministry/Department India
Name of Sponsoring Ministry of Road Transport and Highways, Government of
1.5
Authority India
Name of the
1.6 National Highways Authority of India
Implementing Agency
2 Project Description
The Project highway is part of NH-361 (MSH-3) from Tuljapur
in Osmanabad District to Ausa in Latur district (Design
chainage from Km.0.000 to Km 55.835) and Tuljapur Bypass
(from Km. 0.000 to Km. 11.593) in the state of Maharashtra on
Hybrid Annuity Mode. Brief description of the project highway
is as follow:
Length 67.428 km (including Tuljapur
Bypass of 11.593 km.)
Civil Construction Cost Rs. 813.52 Cr,
Per km Cost: 12.07 Cr.
Major Bridges Nil
Minor Bridges 19 Nos. (15 existing + 4 new)
Culverts 90 Nos. (Pipe+Box)
Flyover Nil
ROBs Nil
Brief description of the VUP/LVUP/Overpass 4 Nos/3 Nos/1 No
2.1
project CUP /PUP 0 No / 3 Nos.
Major Junctions 8 Nos.
Minor junctions 46 Nos.
Length of Service 18.85 Km. – Service Road
Road/Slip road 0.96 km. Slip road
Toll Plaza 1 No. [Existimg Ch. : 450.110
/Design Ch.: 35.200]
Re-alignment 860 m
Bypass 1 No. (Tuljapur Bypass of length
11.593 km.)
Bus bays 34 Nos. (Both sides)
Truck lay Byes 1 No. (Design Ch. 6.900 at RHS)
Rest Area 1 No. (Design Ch. 43. 364 at LHS)
The estimated civil construction cost is Rs. 813.52 crore (SOR
2014-15 Pune region updated to 2015-16) and scheduled to be
completed within 2½ Years from the Appointed Date.
2.2 Justification for the Total traffic on the project highway is carried out in October
project 2010 and projected traffic is 13996 PCU in 2015-16 considering
5% growth rates. As such 4-laning of the project highway is
proposed under NHDP Phase-IV keeping in view the traffic
intensity and importance of the highway.
The project highway was part of State Highway - 3 connecting
Ratnagiri on the West Coast with Nagpur. The stretch from
Tuljapur to Butibori is upgraded as National Highway in March,
2013. The existing road is of 2-lane capacity in distressed
condition and would not be able to cater to the present and
anticipated traffic in the coming years and hence there is need
for rehabilitation and capacity augmentation.
The erstwhile MSH-3 which was declared as different National
Highways during various times connects the arterial road NH-
66 running parallel to the west coast of India and the arterial
NH-44 connecting important cities such as Hyderabad, Nagpur
and Jhansi etc. This highway passes through the Vidarbha
region of Maharashtra. Keeping in view various developmental
activities proposed to be taken up in Maharashtra such as Digha
Port in the West Coast, capacity augmentation of Nagpur
airport, Mega Industrial Parks in Aurangabad, Khed - Sinner
etc., this highway is likely to promote economic growth of the
districts of Wardha, Yavatmal and Chadrapur districts of
Vidarbha region.
MORT&H vide its letter dated 11.05.2015 has decided to take
up the projects under proposed new hybrid annuity mode.
Accordingly the project is now proposed on DBOT Hybrid
Annuity mode.
2.3 Possible alternatives, if No
any
2.4 Estimated capital costs Sl.
Estimated Project Cost
Amount
with break-up under major No. (Rs. in Cr.)
heads of expenditure. Also 1 Base Civil Construction Cost 813.52
indicate the basis of cost 2 Escalation @ 5 % upto appointed date 20.34
estimation. 3 Civil construction cost on bid date (1+2) 833.86
Contingencies @1% of civil construction cost as
4 8.34
mentioned in (3) above
5 Total EPC Cost (3+4) 842.20
IC/Pre-operative expenses @1% of total EPC
6 8.42
cost mentioned in (5) above
7 Total cost (5+6) 850.62
8 Financing expenses 5.11
9 Project cost without IDC (7+8) 855.73
10 Interest during construction (IDC) 48.88
904.61
11 Estimated project cost as on bid date (9+10)
Say 905 Crs.
12 Project IRR 10.42%
13 Project NPV of Project Cash Flow @ 9% 38.33
14 Equity IRR 15.00%
15 Estimated Bid Project Cost @15% EIRR 1,044.02
 The following additional cost is to be incurred by NHAI
towards Pre-construction activities.
R & R and Environment : Rs. 20 crore
Shifting of Utility : Rs. 10 crore
Land Acquisition : Rs. 65 crore
Cost for Green Policy (1% of civil cost) : Rs. 8.14 crore
Total Additional Cost : Rs. 103.14 crore
Total Capital Cost: Rs 1147.16 crore
Rates of basic items have been taken from SOR 2014-15
updated to 2015-16.
2.5 Phasing of investment Date falling on 180th day from Appointed date: 10% of total
Capital Cost
Date falling on 400th day from Appointed date: 30% of total
Capital Cost
Date falling on 650th day from Appointed date: 70% of total
Capital Cost
Date falling on 910th day from Appointed date: 100% of total
Capital Cost
2.6 Project Implementation 1. Project Completion Schedule:
Schedule (PIS) During Construction Period, the Concessionaire shall
comply with the requirements set forth in this Schedule-G
for each of the Project Milestones and the Scheduled
Completion Date (the “Project Completion Schedule”).
Within 15 (fifteen) days of the date of each Project
Milestone, the Concessionaire shall notify the Authority of
such compliance along with necessary particulars thereof.
2. Project Milestone-I
2.1 Project Milestone-I shall occur on the date falling on the
180th (one hundred and eightieth) day from the Appointed
Date (the “Project Milestone-I”).
2.2 Prior to the occurrence of Project Milestone-I, the
Concessionaire shall have expended not less than 10% (ten
per cent) of the total capital cost set forth in the Financial
Package.
2.3 Prior to the occurrence of Project Milestone –I, the
Concessionaire shall have commenced construction of the
Project and achieved 10% Physical Progress.
3. Project Milestone-II
3.1 Project Milestone-II shall occur on the date falling on the
400th (four hundredth) day from the Appointed Date (the
“Project Milestone-II”).
3.2 Prior to the occurrence of Project Milestone-II, the
Concessionaire shall have expended not less than 30%
(thirty per cent) of the total capital cost set forth in the
Financial Package. Provided, however, that at least 70%
(seventy percent) of the expenditure referred to
hereinabove shall have been incurred on physical works
which shall not include advances of any kind to any person
or expenditure of any kind on plant and machinery.
3.3 Prior to the occurrence of Project Milestone –II, the
Concessionaire shall have commenced construction of the
Project and achieved 30% Physical Progress

3 Financing Arrangements
3.1 Sources of financing NHAI is to pay 40% of Bid Project Cost adjusted to Price Index
(equity, debt, mezzanine Multiple (40% of the Completion Cost). Balance project cost is
capital etc.) to be arranged by the Concessionaire through Loan and Equity.
3.2 Indicate the revenue
streams of the project
(Annual flows over
project life). Also indicate
the underlying
assumptions.
3.3 Indicate the NPV of
revenue streams with 12%
discounting.
3.4 Who will fix the
tariff/user charges? Please
specify in details.
3.5 Have any FIs been
approached? If yes, there
response may be
indicated.
4 IRR
4.1 Economic IRR (if
computed)
4.2 Financial IRR, indicating
various assumptions
(attach separate sheet if
necessary)
4 Project Milestone-Ill
4.1 Project Milestone-Ill shall occur on the date falling on
the 650th (six hundred and fiftieth) day from the
Appointed Date (the “Project Milestone-Ill”).
4.2 Prior to the occurrence of Project Milestone-Ill, the
Concessionaire shall have commenced construction of
all Project Facilities and expended not less than 70%
(seventy per cent) of the total capital cost set forth in the
Financial Package.
4.3 Prior to the occurrence of Project Milestone –III, the
Concessionaire shall have commenced construction of
the Project and achieved 70% Physical Progress
5 Scheduled Completion Date
5.1 The Scheduled Completion Date shall be the 910th (nine
hundred and tenth) day from the Appointed Date.
5.2 On or before the Scheduled Completion Date, the
Concessionaire shall have completed the Project in
accordance with this Agreement
Attached as Annexure A.
Rs. 480.09 Crore
The Concessionaire is not entitled to collect the user fee from
the users. User fee shall be collected by the NHAI on
completion of the project in accordance with the provisions of
National Highways Fee (Determination of Rates and Collection)
Rules, 2008 read along with amendments thereof.
No.
-
Basic Equity IRR:- 7.93 %
Estimated Project Cost:- Rs. 904.61 crore (Say Rs. 905 Crore)
Estimated Bid Project Cost:- Rs. 1044.02 crore
Estimated life cycle cost:- Rs. 943.41 crore
Variation in Bid Project Cost as compared to Estimated Project
Cost:- 15.41%.
5 Clearances
5.1 Status of environmental Environment Clearance for project is not required. There is no
clearances reserve forest & wild life sanctuary along the project highway.
5.2 Clearance required from
the State Government and (a) Status of Land Acquisition:-
other local bodies (i) Total Land requirement = 380.007 Ha.
(ii) Available Land = 140.778 Ha.
(iii) Additional land requirement = 239.229 Ha.
(iv) 3(A) Completed, 3 (D) & 3 (G) in process and may
likely to be completed in June, 2016.
(b) Utility Shifting : In Progress
(c) Approval of GAD of ROBs : Not Applicable

5.3 Other support required State Support Agreement (Clause 41.17). The Government of
from the State Maharashtra has signed the State Support Agreement.
Government.
6 GoI Support
6.1 Viability Gap funding, if NHAI is to pay 40% of Bid Project Cost adjusted to Price Index
required. Multiple (40% of the Completion Cost).
6.2 GoI guarantees being Nil.
sought, if any
7 Concession Agreement
7.1 Terms sheet of the Sheet attached. The project is proposed to be implemented as
proposed Concession per Model Concession Agreement dated 09.06.2015 uploaded
Agreement (Attached at on MoRTH web site.
Appendix A)
8 Criteria for short listing
8.1 Is short Listing to be in Single Stage two part system of bidding.
one stage or two stage?
8.2 Indicate the criteria for As per model RFP dated 24.11.2015.
short listing (attach
separate sheet if necessary)
9 Others
9.1 Remarks, if any ----
 Annex II
Appendix A
Term Sheet of the proposed Concession Agreement
A. Sponsoring Ministry: Ministry of Road Transport and Highways
B. Name and location of the project: Four lanning of Ausa-Tuljapur section of NH-361 from
km 0.000 to km 55.835 and Tuljapur Bypass (11.593 km) under NHDP Phase-IV in the State
of Maharashtra under NHDP Phase -IV.
C. Legal Consultant: The team of Financial Consultants has a Legal expert who shall provide
necessary inputs in this regard.
D. Financial Consultant: M/s P A R Y & Co., Chartered Accountants

S No. Item Description

I General
1.1 Scope of the project (Please The Project highway is part of NH-361 (MSH-3) from
state in about 200 words) Tuljapur in Osmanabad District to Ausa in Latur district
(Design chainage from Km.0.000 to Km 55.835) and
Tuljapur Bypass (from Km. 0.000 to Km. 11.593) in the state
of Maharashtra on Hybrid Annuity Mode. Brief description
of the project highway is as follow:
Length 67.428 km (including Tuljapur
Bypass of 11.593 km.)
Civil Construction Rs. 813.52 Cr,
Cost Per km Cost: 12.07 Cr.
Major Bridges Nil
Minor Bridges 19 Nos. (15 existing + 4 new)
Culverts 90 Nos. (Pipe+Box)
Flyover Nil
ROBs Nil
VUP/LVUP/Overpass 4 Nos/ 3 Nos/ 1 No
CUP /PUP 0 No / 3 Nos.
Major Junctions 8 Nos.
Minor junctions 46 Nos.
Length of Service 18.85 Km. – Service Road
Road/Slip road 0.96 km. Slip road
Toll Plaza 1 No. [Existing Ch. : 450.110
/Design Ch.: 35.200]
Re-alignment 860 m
Bypass 1 No. (Tuljapur Bypass of length
11.593 km.)
Bus bays 34 Nos. (Both sides)
Truck lay Byes 1 No. (Design Ch. 6.900 at RHS)
Rest Area 1 No. (Design Ch. 43. 364 at LHS)
The estimated civil construction cost is Rs. 813.52 crore (SOR
2014-15 Pune region updated to 2015-16) and scheduled to be
completed within 2½ Years from the Appointed Date.
1.2 Nature of Concession to be Hybrid Annuity “DBOT” mode.
granted.
1.3 Period of Concession and Article 3 (3.1.1) of Concession Agreement: 17.5 years (2.5
justification for fixing the year construction period + 15 years Operation Period)
period
1.4 Estimated Total Project Cost Rs. 904.61 Crore (Say Rs. 905 Crore)
1.5 Likely construction period 2.5 years (910 days)
1.6 Conditions precedent, if any, for As laid down in Article 4 of the Concession Agreement.
the Concession to be effective.
1.7 Status of land acquisition (a) Status of Land Acquisition:-
(i) Total Land requirement = 380.007 Ha.
(ii) Available Land = 140.778 Ha. (37%)
(iii) Additional land requirement = 239.229 Ha.
(iv) 3(A) Completed, 3 (D) & 3 (G) in process and may
likely to be completed in June, 2016.
(b) Utility Shifting : In Progress
(c) Approval of GAD of ROBs : Not Applicable

II Construction and O&M

2.1 Monitoring of construction; Yes, Independent Engineer shall be appointed as per
whether an independent agency/ Article-21 of Concession Agreement. Monitoring of
engineer is contemplated. construction and monitoring of Operation and
Maintenance shall be as per Article 13 and Article 19 of
Concession Agreement.
2.2 Minimum standards of As per Clause 17.2 of Concession Agreement and
Operation and Maintenance Schedule K.
2.3 Penalties for violation of As laid down in Article-17.8 of Concession Agreement.
prescribed O & M standards
2.4 Safety related provisions As laid down in Article-18 of Concession Agreement
and Schedule-L.
2.5 Environment related provisions As laid down in Clause 4.1.2 of Concession Agreement.
III Financial
3.1 Maximum period for achieving As per Article 22 (Clause 22.1.1) Financial Close within
financial close 150 days from the date of the Agreement and in the
event of delay, it shall be entitled to a further period not
exceeding 120 (one hundred and twenty) days, subject to
payment of Damages to the Authority in a sum
calculated at the rate of 0.05% (zero point zero five per
cent) of the Performance Security for each day of delay
3.2 Nature and extent of capital NHAI is to pay 40% of Bid Project Cost adjusted to
grant/subsidy contemplated. Price Index Multiple (40% of the Completion Cost).
Balance 60% shall be payable to the Concessionaire in
the form of Annuity. The payment during construction
and during Operation Period shall be made as per the
procedure laid down in Article 23 of Concession
Agreement.
3.3 Bidding parameter (capital Bids would be evaluated on the basis of the lowest
subsidy or other parameter) assessed Bid Price (the “Bid Price”). The Bid Price shall
be summation of (a) Net Present Value (NPV) of Bid
Project Cost during the Concession Period and(b) NPV
of O&M cost (the “O&M Cost”) during the O&M
Period, required by a Bidder for implementing the
Project and shall be paid as per the provisions of Article
23 of the Concession Agreement. The Concession Period
is pre-determined, as indicated in the Concession
Agreement. The assessed Bid Price shall constitute the
sole criteria for evaluation of Bids. Subject to Clause
2.16, the Project will be awarded to the Bidder quoting
the lowest assessed Bid Price.
3.4 Provisions for change of scope As laid down in Article 16 of Concession Agreement.
and the financial burden thereof.
3.5 Concession fee, if any, payable -
by the Concessionaire.
3.6 User charges/fee to be collected The Concessionaire is not entitled to collect the user fee
by the Concessionaire from the users. User fee shall be collected by the NHAI
on completion of the project in accordance with the
provisions of National Highways Fee (Determination of
Rates and Collection) Rules, 2008 and its amendments
thereof..
3.7 Indicate how the user fee is to be User fee shall be collected by the NHAI on completion
determined; the legal provisions of the project in accordance with the provisions of
in support of user fee (attach the National Highways Fee (Determination of Rates and
relevant rules/ notification); and Collection) Rules, 2008 and its amendments thereof.
the extent and nature of
indexation for inflation.
3.8 Provisions, if any, for mitigating N/A.
the risk of lower revenue
collection.
3.9 Provisions relating to escrow As laid down in Schedule-O of Concession Agreement.
account, if any.
3.10 Provisions relating to insurance As laid down in Article 26 of Concession Agreement.
3.11 Provisions relating to audit and As laid down in Article 27 of Concession Agreement.
certification of claims.
3.12 Provisions relating to As laid down in Article 34 of Concession Agreement
assignment/substitution right
relating to lenders.
3.13 Provisions relating to change in As laid down in Article 35 of Concession Agreement
law.
3.14 Provisions, if any for As laid down in Article 31 of Concession Agreement.
compulsory buy-back of assets
upon termination/expiry.
3.15 Contingent liabilities of the government.
(a) Maximum Termination As laid down in Clause 31.3 of Concession Agreement.
Payment for Government/
Authority Default.
(b) Maximum Termination As laid down in Clause 31.3 of Concession Agreement.
Payment for Concessionaire
Default.
(c) Specify any other penalty, As laid down in Article 29 of Concession Agreement.
compensation or payment
contemplated under the
agreement.
IV Others
4.1 Provisions relating to competing N/A.
facilities, if any.
4.2 Specify the proposed Dispute As laid down in Article 38 of Concession Agreement.
Resolution Mechanism
4.3 Specify the proposed governing As laid down in Clause 41.1 of Concession Agreement.
law and jurisdiction This Agreement shall be construed and interpreted in
accordance with and governed by the laws of India, and
the courts at Delhi shall have jurisdiction over matters
arising out of or relating to this Agreement.
4.4 Other remarks, if any. -