The 28-km long Coimbatore bypass project is contracted to be completed within 29 months but L&T, which holds a 100 per cent equity now, is hurrying to complete the project within 17 months. It is due to be completed by April or May next year against the original schedule of December 1999.

The reason according to L&T president (Operations) A Ramakrishna is that since this is the first project in the road sector to be built on a BOT (build, operate, transfer) basis, L&T as the builder will be able to collect the toll faster.

The bypass is being built by the special purpose vehicle L&T Transportation Infrastructure Ltd (LTTIL). This company has an equity base of Rs 36 crore in which L&T holds a majority stake which, Ramakrishna says, will get diluted to 51 per cent first and to about 26 per cent laterover 30 years, the period of concession enjoyed by the company.

As per the agreement with the government of Tamil Nadu, L&T must hold a minimum equity stake of 26 per cent at the end of 30 years.

"We would like to have a small equity. By diluting equity we can get a better premium. For this we are looking around to rope in some foreign parties and may finally end with two or three partners," Ramakrishna told The Financial Express.

The toll for the bypass will be based on standards stipulated by the ministry of surface transport. Since the bypass by itself may not yield enough revenue to a private promoter like L&T, Ramakrishna said LTTIL has added a bridge to make it more viable.

The proposal is to build a bridge across the river Noyyal at Athupalam. Construction of this bridge has been already completed in around seven months, well ahead of the completion date of December 3, 1998.

According to Ramakrishna, the road toll and the toll from the users of bridge to be collected over the concessionperiod of 30 years will make the Rs 90-crore project viable.

Meanwhile, financial institutions like ICICI's subsidiary I-Sec is keen only on an equity stake in the bypass project, while ICICI is willing to provide some term loans. Hudco is also keen on taking an equity stake and also to provide term loans. L&T has been approached by these FIs and negotiations are on.

The project will allow traffic to bypass Coimbatore city and ease traffic congestion in the city. It will also reduce traffic time by 30 minutes to an hour and save fuel consumption for road users wanting to go to Neelambur and Madukkarai which will be connected by the bypass.