New hybrid annuity model debuts for road projects

The government is looking at awarding 576 km of national highway projects under the new hybrid annuity model (HAM) in the current financial year for which detailed project reports (DPRs) have been prepared. Taking a step in this direction, the NHAI has formulated a model concession agreement (MCA) under the new model and sent it to the ministry of road transport and highways for approval. For 2015-16, the NHAI has identified 12 road projects, entailing an investment of Rs. 15,905 crore and spanning Delhi, Uttar Pradesh, Himachal Pradesh, Jharkhand and Maharashtra. Further, for 2016-17, the government has identified 15 road projects - at a total length of 1,105 km - and entailing an investment of Rs 12,185 crore. The HAM is a mix of engineering, procurement and construction (EPC) and build-operate-transfer (BOT) formats, with the government and the private companies sharing the total project cost in the ratio of 40:60 respectively. The government also shoulders the responsibility of revenue collection. The NHAI will collect toll and refund the amount in installments over a period of 10 years in 20 equated installments. This new model will reduce financial burden on the concessionaire during project implementation phase. Compared to EPC projects, the shift to HAM would also ease cash flow pressure on the NHA.