The Hindu Business Line : Rajasthan Govt, IL&FS ink deal for Rs 1,200-cr road project

THE Government of Rajasthan and Infrastructure Leasing & Financial Services Ltd (IL&FS) have joined hands for improving and maintaining 1,053 km of road within Rajasthan at a project cost of Rs 1,200 crore.

The project, with a deadline of 24 months starting October 1, would be implemented by a company established with 50:50 joint venture between Rajasthan Government & IL&FS, whereas finance would be raised by IL&FS. The company, named Road Infrastructure Development Company of Rajasthan Ltd (RIDCOR), was incorporated in October 2004.

Out of the Rs 1,200-crore, IL&FS would put in Rs 150 crore in the form of equity, term loans and sub-debt. The Rajasthan Government would put in Rs 300 crore in the form of equity and quasi-equity. The rest would raised by IL&FS from the domestic market within the next 60 days, the IL&FS Joint Managing Director, Mr Hari Sankaran, told Business Line.

"The debts would be raised during the next two months from all the major banks and financial institutions for tenors ranging from five to 15 years," he said, adding that they expect to borrow at rates ranging from 8.5 to 9.5 per cent.

Over and above this, the Rajasthan Government would also set aside Rs 100 crore as contingent fund or debt service reserve fund. "We have already called for bids. The project would be awarded and implemented in seven stretches. The bids would be awarded by September end," said Mr Sankaran. The contractors would be asked to maintain the roads for five years after October 2007, which is the project completion deadline. After the five years, maintenance contracts would be auctioned.

The roads would be tolled by RIDCOR as per the rates mandated by the Rajasthan Government for the first three years after completion. "We would auction the toll process collection mandate after three years," said the RIDCOR Managing Director, Mr Rohit Modi. During the first three years, RIDCOR would collect the toll and use proceeds towards repayment of debt.

The project involves constructing a double lane road (with each loan width being 3.5 metres) and an additional two metres of paved shoulders at the outer ends of the road. "Based on our experience with a similar 113 km-stretch of road between Chennai and Pondicherry, we realised that the mid-lanes are used by fast moving vehicles and the slow moving vehicles travel on the left," said Mr Sankaran.

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