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Background
One of the three bridges across Yamuna connecting Delhi and Noida which is tolled MoU signed on April 7, 1992 between IL&FS, NOIDA and Delhi Administration
Steering Committee comprising representatives of GoUP, GoD, MoUD, DDA, NOIDA and IL&FS established. Noida Toll Bridge Company Limited (NTBCL) incorporated on April 8, 1996
NTBCL to develop, establish, design, construct, operate and 2 maintain the flyway
Background
Bridge opened for traffic in February 2001 Technical Details
.contd
Concession Agreement signed between IL&FS, NTBCL and NOIDA on Nov 12, 1997
552.5 m long bridge with approach roads on the Delhi and Noida ends
Financing Details
Concession Agreement
30 year BOOT concession Key Issues
Concession Agreement
Guaranteed returns on total project cost
contd
Concession Agreement grants the right to the Concessionaire to collect user fees to recover
Total Project Cost as well as a return of 20% per annum on the Total Project Cost over the Concession Period of 30 years. In the event the Concessionaire has not recovered the Total Cost of Project and returns thereon on 30 years the concession period would be extended for a period of two years until the Total Cost of Project and the returns thereon are recovered.
Concession Agreement
Effect of Guaranteed returns on Agreement
contd
In 5 yrs of operation (upto 2006) the accrued dues to the company was Rs. 953.4 crores. (As on March 2008 the dues are 1284 cr.)
Simulation exercise carried out by the consultant of the concessionaire estimated the Total Project Cost to rise to Rs. 11,817.54 crore by 2021 even if entire operating surplus is allocated for payment of returns.
Such shortfalls and consequential rise in Total Project Cost would lead to extension of concession period i.e could result in a perpetual concession. The Directors estimated the concession in excess of 100 years in 2009. As the returns are calculated on the Total Project Cost which includes debt. The actual return on equity is in excess of 32% and could eventually increase to over 47%. Alternatively increase in toll rates or grant of developmental rights 6 were considered
Concession Agreement
Developmental Rights
contd
Additional rights could be granted by NOIDA for enabling the Concessionaire to generate additional revenues for reducing the Total Project Cost Rights include provision of advertising services, developing hotels, restaurants and other facilities DND Flyway Limited (wholly owned subsidiary of NTBCL) incorporated for carrying out developmental activities. 99 acres of land (65 acres on Delhi side and 34 acres on Noida side) available with NTBCL for development 30.493 acquired by DND Flyway Limited from NTBCL at a cost of 103.48 crore. Criteria for award of developmental rights, the way developmental income would be used for reducing Total Project Cost and also how the developmental income would be monitored are not specified in CA
Concession Agreement
Termination on account of
contd
Termination Payment
All sums due to the lenders including the interest accrued and any other amount due and payable
Total Project Cost and returns thereon (in case Noida decides to repudiate the agreement in public interest it would be obliged to pay the Concessionaire an amount of Rs. 1486.3 crore in March 2009 which was three times the original project cost).
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Conceptualising the project As a member of the steering committee, in deciding that the project would be implemented by an entity promoted by itself As a lender to the Concessionaire have voice in selection of
Independent Engineer Independent Auditor Selection of one member Project Oversight Board in case of no agreement between NOIDA and the Concessionaire
The project was awarded as a sole source negotiated project has not faced the market test of commercial viability.
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User Fees
Concessionaire given the power to determine, demand, collect, retain and appropriate the user fee in order to recover the total cost of project and returns thereon. Base fee rate is adjusted to reflect the consumer price index and full indexation has been permitted. Present toll is Rs. 20 for the 5-6 Km stretch
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Concluding Thoughts
Several features appear to weigh the contract in favour of the private partner from public policy point of view.
Adviser to the conceding Authority Promoter/ sponsor of the concessionaire company Lender to the project
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