Karnataka State Highway Improvement Project – II (KSHIP-II)

Government of Karnataka taken up KSHIP- II to further improve state highways. Strategic Option Studies were carried out on l4,090 Km of State Highways. Feasibility studies were conducted on selected 4888 km roads. The selection of roads for preparation of Detail project report was based on ranking with 80 % weightage for economic internal rate of return and 20% weightage for Deprivation Index derived from Dr Nanjundappa committee report for redressal of regional imbalances. Finally, 3411 Km of State Highways are identified for improvement, which is approved by the Cabinet in Nov 2006. A Government Order was issued to notify the consultants to prepare DPR for selected 3411 kms vide No. PWD 61 EAP 2006 dated 25.11.2006. Consultants M/s.Scott Wilson Ltd., U.K in Jv with Scottwilson India Ltd,Delhi prepared the DPR for 3411 Kms.

After successful completion of KSHIP-1 and as per the Government order no PWD 61 EAP 2006 dated 25-11-2006 the improvement of 3411kms of State Highways of the Core Road Network of the State was initiated under KSHIP-II. All the roads under KSHIP-2 were planned for upgrading to a min. 2 Lane carriageway with geometric improvements.  The list of roads prioritized for improvement under KSHIP-II is provided below: 

GO No. PWD 61 EAP 2006 Bangalore Dated: 25-11-2006

KSHIP-II was taken up in two stages. The Stage-1 was taken up in 2011 with the World Bank finance and Stage-2 in 2012 with the ADB finance.

KSHIP-II – STAGE – I – World Bank Project:

Initially the World Bank sanctioned a loan assistance of US$ 300 million with an overall project size of Rs.2545 crore. Following the Loan Negotiations held with the World Bank and DEA, GOI in February 2011 the Project cost underwent a significant revision. With the concurrence of the DEA, GOI the Loan was enhanced from US$ 300 million to US$ 350 million and further the World Bank also enhanced the component size under the “Highway financing Modernisation” from Rs. 50 crore (US$ 10 million) to Rs. 1682 crore   (US$ 374 million) which was aimed at assisting KRDCL in implementing the concept of Co-financing (Private financial institutions) to develop about 361 km of highways under either Item-rate contracts or PPP concessions. The Project Cost was revised from the initial Rs. 2545 crore (US$ 565 million) to Rs 4522 crore (US$ 1005 million).

The details of the Loan agreement with the World Bank are:

1. Loan no: 8022-IN
2. Loan Signed date: 30-05-2011
3. Loan Effectiveness date: 19-07-2011
4. Project Cost: US$ 1005 million (Rs.4522 Cr)
5. World Bank Share: US$ 350 million (Utilised US$ 295.21 million)
6. GOK Share: US$ 155 million (Rs.697 Cr)
7. Private Sector/ Developer/KRDCL Share: US$ 500 million (Rs.2250 Cr)
8. Loan Closing date: 31-12-2016 (Extended upto 28th Dec, 2018)
9. Loan Amortization Schedule: 15-06-2016 to 15-03-2029.

The implementation of World Bank assisted KSHIP-2 under Stage-1 and the list of roads of 834 kms received the approval of the Government vide GO no. PWD 13 EAP 2010 dated:28-06-2010 and GO no. PWD 121 EAP 2011 dated: 04-02-2012.

A total of 1195 lms road length (KSHIP 834 kms + KRDCL 361 kms) was taken up for improvement at a total project cost of Rs 4522 crores under KSHIP-2, out of which World Bank loan assistance is Rs 1575 Crores. The Project was implemented in following contracts;

EPC Contracts (269 kms):

The EPC contracts are Item Rate contracts with a defect notification period of one year and the World Bank would fund 80% of the contract cost. The contracts for the five EPC packages were procured observing ICB procedures and commenced in July/August, 2011. The contract WEP2 from Haveri- Hangal-Tadas (75 kms) entrusted to M/s Roman Tarmat, Mumbai was terminated due to non-performance in Nov, 2012 and retendered by splitting the contract into two NCB contracts WEP2A & WEP2B. The contract for WEP2A and WEP2B were signed in Feb, 2013 and June 2013 respectively. The improvement was taken up at a contract amount of Rs 596 Cr in six contracts having duration of 18 to 36 months.

Subsequently, a part of the road of Contract WEP3 Upgradation of Road from Dharwad to Saundatti for a length of 2.50 Kms in Dharwad town limits was converted from Upgradation to Tender Sure model as a separate package (WEP-3A) in Oct 2017.

 The details of the contracts are as under:

The total cost incurred for theses contracts is around Rs 672.35 crore as on March 2024.

Annuity contracts (301 kms):

The Annuity Contracts are of 10 years duration with max. of 2 to 21/2 years of construction and 8 to 71/2 years of maintenance. Under Annuity Contracts, the World Bank assistance is utilised for an upfront payment of 50% of the construction cost on completion of the construction and the remaining payments of 50% to be funded by GOK during the maintenance period of 71/2 years on annuity basis. The details of the roads taken up under Annuity mode are as below:

* 239 cr lumpsum during construction + 15 Annuity installments of Rs. 71.15 cr

** 136 cr lumpsum during construction + 16 Annuity installments of Rs. 39.49 cr

The Agreements were signed in 24-03-2014 for WAP1 and 14-03-2014 for WAP2. The works were commenced on 12-12-2014 after achieving financial closure and fulfilling the conditions precedent.

The Project work of WAP1 was completed on 20-09-2018 and the Project work of WAP2 was completed on 12-12-2017. The road works are presently in Operation and Maintenance period. The O & M period will be upto 2024-25.

Annuity contracts converted to Item rate Contracts: (264 kms):

The Two contracts of WAP3 and WAP4 with a total length of 264 kms had been initially proposed to be taken up under Annuity model. As the annuity bids did not yield value for money, the bids were cancelled. The contracts were re-procured and implemented under three Item Rate contracts.

The brief details of the contract works are as under:

A road length of 256 kms has been completed at cost of Rs.871.62 crore upto end of March 2024. The road work for WAEP4 has been completed deleting a reach of 7.453 kms from the scope which was affected by LAQ.

KRDCL- (Co financing PPP Contracts) (361 kms):

A road length of 361kms from out of 3411 kms is taken up for improvement through PPP contracts under Co-financing through KRDCL under Highway modernisation component of the Project. The construction cost will be shared between WB, KRDCL & Developer in the ratio of 20:20:60. The list of roads is given below:

KRDCL is designated as the Implementing Agency for this project component. The original DPR was revised for the selected roads to suit the funding agency terms. Based on the Value for Money (VfM) analysis, the roads are taken up for improvement under Hybrid Annuity model. The road works are presently in Operation and Maintenance period.

Karnataka State Highway Improvement Project – II (KSHIP II) - Asian Development Bank (ADB) loan Assistance.

The brief details of the loan are as under:

1. Loan no: 2705-IND
2. Loan Signed date: 20-07-2011
3. Loan Effectiveness date: 12-09-2011
4. Project Cost: US$ 462.75 million (Rs.2150 Cr)
5. ADB Share: US$ 315 million (Revised:US$265 million, utilized :US$ 263.2 million)
6. GOK Share: US$ 147.75 million (Rs.687 Cr)
7. Loan Closing date: 30-06-2015. (Rev1 date 31-12-2016,Rev2 date 30-06-2018, Rev3-31.10.2018)

A total of of road length and 4 ROBs in the project roads at a total project cost of        Rs 2150 crores was taken up with Asian Development Bank (ADB) loan assistance of US$ 315 million. With cancellation of surplus loan, the assistance is revised to US$265 million. The improvement was taken up in nine EPC packages at a total contract cost of Rs 1151cr. The contract duration varies from of 15 to 36 months. The works were commenced in March, 2012. During execution, three contracts viz AEP3, AEP6 and AEP9 were terminated. The package wise details are below:

The three terminated contracts of AEP3, AEP6 & AEP9 were re-procured splitting the roadwork into seven NCB Packages of AEP3A, AEP3B, AEP6A, AEP6B, AEP9A, AEP9B and AEP9C with lesser duration of 21 months. The details are as under:

All Road works completed. The expenditure incurred towards road works is Rs. 1850.87 crore upto end of March 2024

ROB Packages:

The following 4 ROBs which are a part of the Upgradation Package AEP6, AEP7 & AEP9 have been taken up for construction under ADB loan assistance in separate contracts. The contracts have duration of 24 months. The details are as under:

All the four ROBs are completed. The expenditure incurred for ROB works is Rs. 146.19 crore upto end of March 2024. 

SUMMARY OF THE PROJECT WORKS of KSHIP-II:



List of World Bank Consultancies working for KSHIP-II

List of Asian Development Bank Consultancies working for KSHIP-II