Non-recourse financing implied that the promoters' equity is the only collateral for the loanable funds provided by the bank. According to Ashok Kheny, Managing Director, NICE Ltd, ICICI agreed to this special financing pattern because NICE has taken permission from the government to protect the debt component of the project. In case of default, NICE has agreed to lose its equity and then additional infusion of funds will be sought from another promoter. In addition, the traffic studies conducted for the project have shown a large degree of viability for the project, which helped convince ICICI.

A typical escrow account will be set up and all revenues from the toll or usage of wayside amenitieswill go into this account, which will work as a direct debt instrument. A certain percentage of collections will then automatically be debited and paid off to ICICI.

ICICI has agreed to be the lead financial advisor and lender for the BMIC. NICE is in talks with other FIIs like IDBI to enter into consortium lending for the first phase of the project.

The first phase of the project which involves the construction of an outer peripheral road to the west of Bangalore and a highway upto Bidadi. This phase will cost Rs 200 crore with the promoters bring in equity of Rs 65 crore and Rs 135 crore as debt from ICICI and others in the consortium.

Meanwhile, the Karnataka Industrial Area Development Board (KIADB) and NICE has created a revolving account of Rs 10 crore for the acquisition of land for the corridor. The fund is to be periodically replenished up to Rs 10 crore by NICE with KIADB. The land for the first phase will be allotted within the next few weeks. A public interest litigation filed against theland acquisition for the project was dismissed by the Karnataka High Court last week.

A resettlement and rehabilitation package is being worked out by the Mettalurgical & Engineering Consultants (India) Ltd (Mecon), that is also taking an environmental assessment of the land to be acquired. Kirloskar Consultants are undertaking a detailed cost estimate with an updated traffic survey. An in-house engineering company, India International Infrastructure Engineers Ltd has been set up by the Kalyani group to to survey and supervise the engineering aspects of the project.

The State Highways Act has already been amended earlier this year to accommodate toll collections based on a new formulation worked out by NICE.