By 
Asit Ranjan Sikdar, Senior Vice President, Project Advisory and Structured Finance; and Ravi Malhotra, Vice President, Project Advisory and Structured Finance, SBICAPS
Maharashtra State Infrastructure Development Corporation Limited (MSIDC) has successfully concluded the bidding process and executed concession agreements for three build-operate-transfer (BOT) toll road projects around Pune, together spanning over 138 km and drawing an aggregate infrastructure investment of more than Rs 154.92 billion.
Mapping the background
The origin of these projects lies in the increasing congestion in the Pune region, one of Maharashtra’s most important economic and logistics routes. As traffic volumes continue to rise, the development of a high-capacity corridor has become necessary. Recognising the strategic importance of these corridors, the centre and the Maharashtra government explored options to augment capacity. Pursuant to this, the responsibility of implementing the Pune-Shirur, Talegaon-Chakan-Shikrapur and Hadapsar-Yevat sections were entrusted to MSIDC. Each project involves the upgradation of the existing at-grade section, along with the development of a greenfield elevated highway, to be implemented under a public-private partnership (PPP) on a design-build-finance-operate-transfer (DBFOT) basis. The Project Advisory and Structured Finance department of SBICAPS was appointed as the transaction adviser to assist MSIDC in structuring and implementing the transaction. Legal and technical consultants were also appointed for the preparation of concession agreements and to provide inputs on traffic and technical aspects.
Three corridors, one vision
Pune-Shirur, part of NH-753F, is a 53.4 km stretch upgraded to a four/six-lane at-grade carriageway with a 31.8 km, six-lane elevated corridor, built to accommodate a future metro alignment at a second level. Hadapsar-Yewat, part of NH-65, involves upgrading the existing four-lane highway into a six-lane corridor, comprising a 31.65 km at-grade stretch and a 25.8 km greenfield elevated road, also designed to accommodate a future metro alignment. Talegaon-Chakan, connecting the industrial belt northwest of Pune, comprises a 53.2 km four-lane at-grade and elevated highway with a 26.3 km elevated section.
Deal structuring
A two-stage concession framework was designed to share the risk-return of the projects. All three projects followed the DBFOT toll model, with a 30-year concession agreement between the Ministry of Road Transport and Highways (MoRTH), the Public Works Department, Maharashtra government, and MSIDC, and a 29-year sub-concession agreement between the Maharashtra government, MSIDC and the selected bidder. The concession and sub-concession agreements contain built-in buffer provisions allowing the extension of the concession period to accommodate traffic variation risk. Bidders competed based on the net present value (NPV) of projected toll revenue over the sub-concession period, with a mandatory upfront premium and an annual administrative fee of 1 per cent of gross toll receipts.
Together, the three bid premiums add up to Rs 9.5 billion – an upfront value that MSIDC will realise. The bid structuring process required engagement with authorities, consultants and market participants. Several rounds of discussions were held to evaluate stakeholder feedback, refine risk balancing and structure the transaction documents. Various contractual and commercial mechanisms were examined to address investor concerns and incorporation of appropriate contractual mitigants within the concession/sub-concession framework. Each stage of the process involved balancing competing objectives facilitating private investment, protecting public interests and ensuring that the project remained financially viable.
The road ahead
Once operational, the three corridors will together add 84 km of multimodal elevated highway to the region and are expected to ease congestion on some of Pune’s busiest arteries, cutting freight and commuter travel time to the city’s industrial hinterland. This transaction marks a significant step in institutionalising a repeatable PPP framework for Maharashtra’s road sector.
