Wednesday, June 13, 2012

Bangalore Development Authority (BDA) Pre-feasibility report on Construction of elevated corridor between Jnanabharathi and Old Airport Road

The project envisages developing an elevated road corridor between Jnanabharathi and Varthurkodi. The alignment will largely follow the existing roads connecting the two points and will act as an alternate means of transit between the two points. The identified alignment (Jnanabharathi junction to Varthurkodi) carries heavy local and commercial traffic owing to the industrial and commercial development along the corridor. The Nayandahalli junction is congested with vehicles entering Bangalore city from Mysore viz SH-17, thus adding to the chaos along this network. The proposed corridor is envisaged to ease the traffic flow and result in unhindered traffic movement along this route.



Components of the Project
The construction of elevated corridor along the identified alignment will include the following:
• Widening of roads
• Improvement of junctions
• Pavement improvement
• Provision and relocation of concealed drainage under the pavements on either side of the roads
• Upgrade of 4 lane carriageways
• Overlay treatment
• Provision of crash barriers
• Road and overhead signage

The proposed Elevated corridor from Jnanabharathi to Varthurkodi entails a stretch of 28 kms along the ring road from Tumkur to Mysore. The elevated corridor is proposed to start from the Jnanabharathi (A) and connect to Varthurkodi via Sirsi circle (B), Town Hall (C), Hudson circle (D), Vellara junction (E), and Old Airport Road (F). 

Cost Estimation
The estimated cost of the project is Rs. 2800 crores. The costs have been outlined below:


Revenue streams
The revenues to the developer will accrue in the form of an annuity payment spaced over the concession period. The estimated base annuity amount works out to be approximately Rs. 21500 lakhs. This annuity amount would be escalated by 5% every year.   

Viability assessment
The viability assessment has been carried out over two concession period i.e. 20 years and 25 years.The debt to equity ratio has been assumed to be 3:1. Additionally, it is assumed that the project will be able to access the central and state government viability gap funding (VGF) to the tune of 40% of the project cost (20% from central and 20% from state). The viability based on the annuity structure has been depicted below. The project level internal rate of return (IRR), IRR of equity and the net present value of the equity have been worked out:

It is evident that for the concession period of 25 years, the project would be more attractive for a private developer since the project level IRR is roughly 15% while the equity IRR is pegged at 18%. The net present value (NPV) of the equity is also positive for the said concession period.

 

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