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Govt'shybridannuitymodelpaveswayforroad
projects
InIndia,roadprojectsareawardedviaoneofthethreemodels:BuildOperateTransfer(BOT)
Annuity,BOTToll,andEPC
VijayCRoy|NewDelhiJuly09,2015LastUpdatedat00:49IST
TheNationalHighwaysAuthorityofIndia(NHAI)isallsettodebut
thehybridannuitymodel(HAM)forawardofhighwayprojectsby
Novemberthisyear.Takingastepinthisdirection,theNHAIhas
formulatedamodelconcessionagreement(MCA)underthenew
modelandsentittotheministryofroadtransportandhighwaysfor
approval.
Thegovernmentislookingatawarding576kmofnationalhighway
projectsunderthenewmodelinthecurrentfinancialyearforwhich
detailedprojectreports(DPRs)havebeenprepared.
For201516,theNHAIhasidentified12roadprojects,entailinganinvestmentofRs15,905croreand
spanningDelhi,UttarPradesh,HimachalPradesh,JharkhandandMaharashtra.Further,for201617,the
governmenthasidentified15roadprojectsatatotallengthof1,105kmandentailinganinvestmentof
Rs12,185crore.
WHERERUBBERMEETSTHEROAD
InIndia,roadprojectsareawardedviaoneof
thethreemodels:BuildOperateTransfer
(BOT)Annuity,BOTToll,andengineering,
procurementandconstruction(EPC)
TheHAMisamixofengineering,
procurementandconstruction(EPC)andbuild
operatetransfer(BOT)formats,withthe
governmentandtheprivatecompaniessharing
thetotalprojectcostintheratioof40:60
respectively
Thisnewmodelwillreducefinancialburden
ontheconcessionaireduringproject
implementationphase.ComparedtoEPC
projects,theshifttoHAMwouldalsoease
cashflowpressureontheNHAI
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"Since,weareexecutingtheprojectonthehybridannuitymodelforthefirsttime,weneedtohavea
modelconcessionagreementdocument,whichwillbethebasisforexecutingtheagreementbetweenthe
governmentandtheconcessionaire.Now,theMCAisreadyandwehavesentittotheministryfor
approval.Weexpecttogetitapprovedbytheministryinamonth'stimeandwillinvitetenders.
Hopefully,weareexpectingtoawardthecontractsbyNovemberthisyear,"saidaseniorofficialinthe
NHAI.
TheHAMisamixofengineering,procurementandconstruction(EPC)andbuildoperatetransfer
(BOT)formats,withthegovernmentandtheprivatecompaniessharingthetotalprojectcostintheratio
of40:60respectively.Thegovernmentalsoshoulderstheresponsibilityofrevenuecollection.TheNHAI
willcollecttollandrefundtheamountininstalmentsoveraperiodof10yearsin20equatedinstalments.
Thisnewmodelwillreducefinancialburdenontheconcessionaireduringprojectimplementationphase.
ComparedtoEPCprojects,theshifttoHAMwouldalsoeasecashflowpressureontheNHAI.
SeniorNHAIofficialaddedthatthehybridmodelwillbeawinwinfordevelopersaswellasthe
government.Inthecurrentsituationwheredeveloperslackcapital,themovetolowertheupfrontcostsis
significant.Giventhecertaintyofcashflowsintheannuitymodel,developerscanobtainmoreleverage
frombanks.Thismodelislikelytoeasefinancialburdenontheexchequertoo,asitlowerstheirupfront
contributionfortheprojectcomparedtoEPC.
Themajorroadprojects,whichwillbeawardedthroughHAM,arethe68kmlongWardhaYeotmal
Waranga(Pkg1,Maharashtra),50kmlongDelhiHapur(Delhi/UttarPradesh),67kmTuljapurAusa
(Maharashtra),57kmGovindpurChasJharkhand/WestBengalborder.
InIndia,roadprojectsareawardedviaoneofthethreemodels:BuildOperateTransfer(BOT)Annuity,
BOTToll,andengineering,procurementandconstruction(EPC).IntheBOTAnnuitycase,theriskof
thedevelopergetsreducedsinceitconstructstheroadandmaintainsit,andgetsfixedpaymentfromthe
government.InBOTToll,thedevelopernotonlyhastoconstructandmaintaintheroad,butalsohasto
recoverhismoneybycollectingtollhereanadditionaltrafficriskhastobebornebythedeveloper.In
anEPCcontract,onlytheconstructionriskiswiththedeveloper.

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