Exclusivity Right For Noida Bridge Promoters

The promoters of the Delhi-Noida bridge project have signed a 10-year exclusivity agreement with the governments of Uttar Pradesh and Delhi and the surface transport ministry against the setting up of any parallel facility.

Under the agreement, the state governments will not construct any bridge between Nizamuddin and the Okla barrage during the period, or till the project reaches at least 60 per cent of the targeted utilisation.

Sources said the arrangement has been worked out to ensure sufficient revenue during the concession period to service the debt and the principal.

The project is estimated to cost Rs 433 crore and has a debt equity ratio of 70:30.

The debts incurred by the project include a Rs 50 crore loan from Industrial Finance Corporation of India (IFCI) and another Rs 50 crore from Hudco, both of which have a maturity period of 10 years. The funds have been provided on a project recourse basis at the rate of over 16 per cent.

Besides, Infrastructure Leasing and Financial Services Ltd (ILFS), the promoter of the special purpose vehicle (SPV) executing the project, has also finalised plans to raise Rs 50 crore through issue of deep discount bonds.

These bonds, which are expected to have a total maturity period of 16 years, will not have any call options but will have put option, which allows the subscriber to realise liquidity by offering the instrument for repurchase at the end of the fifth and seventh year. These bonds will be on a limited recourse basis.

According to banking sources, the project will have to raise sufficient funds for repayment during this period. Adequate revenues for meeting debt service requirements are unlikely to be generated if parallel facilities come up in the vicinity, offering a toll-free passage or charging lower tolls.

Almost all bypass and bridge projects have secured some exclusivity agreement, since most of them are being funded on a limited recourse basis. These include the Narmada bridge, the Durg by-pass , the Coimbatore by-pass and the Nellore by-pass projects.

The project promoters for the Delhi-Noida bridge have already appointed the Engineering Procurement and Construction (EPC) and operation and maintenance (O&M) contractors for the project.