Odisha awards $198m road PPP to domestic bidder

The eastern Indian state has approved and awarded its largest ever PPP project to domestic infrastructure-focused firm L&T IDPL.

The state of Odisha, India’s ninth-largest province, is attempting to get some momentum behind its public-private partnership (PPP) programme with the approval of one of its largest projects yet: the INR12.9 billion (€150 million; $198 million) expansion of State Highway No.10 between the cities of Sambalpur and Rourkela.

The road will be expanded to comprise four lanes and be about 163 kilometres long, according to local media reports. The province’s High Level Clearance Authority (HLCA) awarded the project last week to Chennai-based L&T Infrastructure Development Projects Limited (L&T IDPL).

The SH-10 project will be implemented under a Design, Build, Finance, Operate & Transfer (DBFOT) basis. The government will also provide 36 percent of the financing for the deal, with INR2.6 billion coming from the central government and INR2.1 billion coming from the Odisha state government.

The land acquisition needed for the road’s expansion will have to be overseen in 85 villages, but a senior official told The Economic Times that the land should be made available by the end of the month. “About 90 per cent land has already been acquired for the project,” he said, adding that the statutory clearances for the project have already been obtained.

L&T will be granted a 22-year concessionary period for the project, which includes a three-year construction period, media reports detailed. Once the construction is completed, in accordance with local laws, L&T will be allowed to collect tolls at three toll gates of the highway. The Odisha Diary said the government has estimated that this should give L&T an internal rate of return (IRR) of 18 percent overall. Although the project was originally cleared in 2009, it has taken it until now to get through central and local government systems, Odisha Diary continued.

L&T has been awarded dozens of infrastructure project across India since its founding in 1997, including 23 road projects, five of which have been exited. As of last year, L&T had an income of approximately INR1 billion, but its profit more than halved year-on-year.