HCC Concessions, the infrastructure development arm of HCC Group, today concluded its conciliation with National Highways Authority of India (NHAI) for all disputes concerning Baharampore-Farakka Highways and Farakka-Raiganj Highways.
Baharampore-Farakka Highways will receive Rs 405 crore while Farakka-Raiganj Highways will get Rs 854 cr from the NHAI.
The statement said that besides use of funds for NHAl project completion and an exit to the Xander Group, a substantial portion will be received by HCC as a settlement of cost claim.
Private equity firm The Xander Group had picked up 14.5 per cent stake in HCC Concessions for Rs 240 crore in 2011.
In the same year, the investor also picked up over five per cent stake in the parent Hindustan Constructions Company.
Meanwhile, Farakka-Raiganj Highways will release the settlement proceeds and further sums to HCC Group, as per the existing contractual understanding with Farakka-Raiganj Highways' buyer Cube Highways & Infrastructure II Pte Ltd.
Farakka-Raiganj Highways was sold to Cube on September 22, 2020, at an enterprise value of Rs 1,508 crore.
As a further consequence of this conciliation, Cube will release Rs 233 crore withheld as part of HCC Concessions' sale of Farakka-Raiganj Highways and is also required to share a significant portion of Farakka-Raiganj Highways's growing revenue for the remainder of the concession's 20 years.
With 100% construction completion being achieved at Farakka-Raiganj Highways, toll rates will increase 70% in 2021-22. Additionally, up to Rs 100 crore is further payable by Cube in 2023, contingent on traffic projections being realised.
The statement said that Baharampore-Farakka Highways' closure of disputes with NHAl facilitates the required liquidity in the project to accelerate completion of a much-delayed bypass, which along with the special purpose vehicle's strong free cash flow from toll operations, frees HCC Concessions to monetise this project.
"The proceeds of conciliation shall be used to expedite completion of our key projects and to strengthen HCC's participation in future works of nation-building," said Arjun Dhawan, HCC Group's chief executive officer.
Baharampore-Farakka Highways and Farakka-Raiganj Highways are among the largest public private partnership (PPP) projects in the country. They encompass 200 km of Bengal's main artery, NH-34 and pass through major towns such as Baharampore, Farakka, Kaliachawk, Malda, and Gajol, besides being the only link over the river Ganges in the region.
Both Baharampore-Farakka Highways and Farakka-Raiganj Highways faced significant delays mainly related to land acquisition, commencing toll operations on May 14, 2014, and October 19, 2016, respectively.
The concession periods are 25 years for Baharampore-Farakka Highways and 30 years for Farakka-Raiganj Highways. The full completion of this all-important corridor shall reduce the travel time from Kolkata to North Rennal by half.