Latest news with #HybridAnnuityModel
Time of India
3 days ago
- Automotive
- Time of India
Toll on SP Ring Road to be revised
Ahmedabad: From Jan 1, 2027, the Ahmedabad Urban Development Authority (Auda) itself will collect toll tax on the six-laned SP Ring Road. The toll tax will be revised, and as per new tender provisions, contractor companies developing the road will be paid annuities every six months. The current concession company's toll collection term ends on Dec 31, 2026. Whether LMV passenger four-wheelers will continue to be exempt from the tax will be decided by the state govt at a later stage, officials said. You Can Also Check: Ahmedabad AQI | Weather in Ahmedabad | Bank Holidays in Ahmedabad | Public Holidays in Ahmedabad On Feb 1 this year, Auda floated two tenders worth Rs 2,200 crore for six-laning of the 76km SP Ring Road. With the bids now opened, contracts are expected to be awarded soon. Package 1 of the project involves six-laning the road's 37km stretch in the city's eastern area while Package 2 involves six-laning of a 39.25km stretch in the western part. It has also been decided to widen the 34km two-lane service road to four lanes, and the 15km three-lane service road to four lanes. An Auda official requesting anonymity said, "Auda floated two separate tenders for the two packages on the Hybrid Annuity Model (HAM). Nine companies have bid for one package, while 11 have bid for the other. The bids for both packages have been opened and contracts will be finalised soon." by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like An engineer reveals: One simple trick to get internet without a subscription Techno Mag Learn More Undo "According to the tender provisions, 60% of the cost of six-laning will be borne by the contractor, while Auda will take care of the remaining 40%. New toll booths will be set up and Auda will collect revised toll tax for 15 years. According to the tender formula, a certain amount from toll tax revenue will be paid to the contractor companies as an annuity every six months." Auda laid the SP Ring Road in 2006 on a build-operate-transfer (BOT) basis. As traffic increased, it was decided to six-lane it with an expansion report prepared in 2017 and later approved. In Oct 2017, the Auda board, through resolution No. 267, exempted LMV passenger four-wheelers from toll tax on SP Ring road under its jurisdiction. Auda pays the concession company ARRIL Rs 40 to 50 crore annually to compensate for this loss in revenue. In Feb 2019, ARRIL submitted a request letter expressing willingness to spend Rs 200 crore for the six-laning without funds from Auda. In exchange, it requested an extension of its concession agreement, which ends on Dec 31, 2026, by three years and six months. The company also mentioned the possibility of amending the concession agreement regarding incremental costs and project revenue as guided by its financial lenders. While Auda okayed the concessionaire bearing the six-laning expenses, it did not agree to extending the concession period. The authority then appointed a third-party consultant to determine the bill of quantity and put a condition that if toll revenue increases, the additional amount should be given to Auda. The six-laning proposal was approved based on these conditions, but later cancelled in 2021.
New Indian Express
3 days ago
- Automotive
- New Indian Express
HAM-handed or not? Kerala road collapses raise questions on how national highways are built
The recent collapse of multiple stretches of under-construction national highways in Kerala has not only sparked a heated debate about construction quality, but also about the mode under which they have been built. The Congress party has been quick to criticise the Hybrid Annuity Model (HAM), under which a majority of these roads were built, alleging inflated costs, poor quality and high contractor profits. Should other highway construction modes have been considered instead? What do experts have to say? National Highway projects are executed on mainly three modes—Build Operate and Transfer (BOT), Hybrid Annuity Model (HAM) and Engineering Procurement and Construction (EPC). In an EPC (Engineering, Procurement, and Construction) mode, the Government pays private players to build roads, and gives them no role in ownership, toll collection, or maintenance. In the BOT (Build, Operate, Transfer) mode, private players build, operate, and maintain roads for a specified period, arranging finances and collecting tolls or annuity fees. The HAM (Hybrid Annuity Model) mode, meanwhile, is a combination of EPC and BOT, where 40% of the project costs are funded by the government and 60% by the developer. HAM aims to balance risks between developers and the government, providing a more sustainable financial mechanism for road development. But has it ended up being HAM-handed instead? Why HAM came into play In the early 2000s, the National Highways Authority of India (NHAI) relied on the Build-Operate-Transfer (BOT) model to build roads without spending much money. Private contractors built the roads, collected tolls, and handed them back to the government after 20-30 years. However, by 2014, the BOT model had collapsed due to unrealistic traffic projections, delayed land acquisition, and hesitant financiers. The Hybrid Annuity Model (HAM) was introduced in 2016 to revive private-sector investment in the road sector, which had dwindled due to the challenges faced by the BOT model. Under HAM, the government provides 40% of the project cost as construction support during the construction period, while the remaining 60% is paid as annuity payments over the operations period, along with interest, to the concessionaire. This model aimed to expedite National Highway construction by rekindling private developer interest in highway projects. Another major factor behind the introduction of HAM was the growing liabilities of the NHAI. Its debt burden increased rapidly and touched Rs 3.35 lakh crores by 2024, putting the authority in a tight spot. Interestingly, NHAI's debt did not reflect in the Union Government's total debt as it had an "Autonomous" status. Suprio Banerjee, Vice President and Co-Group Head, ICRA Ltd told The New Indian Express that the HAM model was introduced in 2016 to address the challenges faced by road developers in execution and funding tie-up for BOT-toll projects and to encourage private sector participation. "Since its introduction, the road ministry has awarded more than 19,000 km length of projects under the HAM model to more than 100 developers with a cumulative BPC (bid project cost) of more than Rs 5 lakh crore till March 2025. The awarding also improved over the years with healthy share of awards in HAM mode since FY2021," he added. "Banks weren't funding BOT projects, and financial closure wasn't happening. The assumption of 8-10% annual traffic growth was off, as parallel road, air, and rail infrastructure development affected it. EPC was draining NHAI's coffers, so they introduced HAM. HAM is a win-win for all three stakeholders - government, contractors, and banks - as the risk is shared among them. It picked up well..." said Ankita Shah ,Vice President at Elara Capital. Contractors gaining 100% profit without any risk? But after several stretches of road, including service roads, collapsed under the rains in Kerala, the Congress party released a scathing critique of the Hybrid Annuity Model (HAM). The Congress claimed in a social media post that the Build-Operate-Transfer (BOT) model has been largely defunct since 2016, with most projects now being executed under the Hybrid Annuity Model (HAM) or Engineering, Procurement, and Construction (EPC) model. They pointed out that the HAM model essentially amounts to companies lending to the government at an interest rate 3% higher than the bank rate. The party also highlighted that EPC contracts reveal the true cost of construction, including the contractor's profit, which typically assumes a standard operating profit margin of around 20%. Citing the example of the Azhiyur to Vengalam stretch of NH-66, the post noted that the original contractor was awarded the contract for Rs 1,838.1 crore but the work was subcontracted for Rs 971 crore. This raises questions about the risk taken by the company and the excessive profits earned. The X handle @INCKerala highlighted that the contract for the Azhiyur-Vengalam project excludes the cost of operation and maintenance (O&M) for 15 years, which will be paid separately by NHAI to the company, adjusted for inflation annually. Specifically, the contractor has quoted an annual O&M amount of Rs 8.65 crore for this project. Further scrutiny, the party said, reveals that the actual construction cost of the Azhiyur-Vengalam stretch is approximately Rs 23.7 crore per kilometre, less than half of the awarded amount of Rs 45 crore per kilometre. This stark difference underscores the windfall profits enabled by the Hybrid Annuity Model (HAM) over 15 years, despite construction costs aligning with those of EPC projects, the Congress went on to allege. The post emphasised that executing projects through EPC, with the government taking loans directly, would be significantly cheaper. KPCC General Secretary (Organisation) M Liju told The New Indian Express, "Think about the overall loot happening in the name of highway construction. It would have been much cheaper if all projects were executed through EPC, with the government taking loans directly. The 60% annuity payment is essentially a loan from companies to the government at a higher interest rate than the bank rate. Instead of directly taking a loan at Bank rate of 8%, NHAI takes a loan from construction companies at 11%. What's the risk taken by the company to warrant such lucrative rewards?" Costlier, but still the better option? Interestingly, speaking at a panel discussion a senior official of the National Highways Authority of India (NHAI) had highlighted some months earlier that the HAM is costly to the government, involving upfront grants and repayment of funds with interest. According to Suprio Banerjee, "A HAM project requires more funding from developers compared to EPC projects, but less than BOT-Toll projects. However, the authority can recover some costs through toll collection, as it retains toll rights under HAM." He further noted that over the last three years, EPC has been the preferred route, accounting for 65-70% of total road awards, while HAM projects comprised 25-30%. Although HAM's share declined to around 13% in FY2024, it's expected to rebound to over 25-27% in FY2026, driven by projects above Rs 500 crore being awarded in BOT (HAM or Toll) mode. In a paper Comparative Study of Bot And Ham Models of Public Private Partnership published in the International Journal of Research in Advent Technology, Nikhil Kumar and Akash Agrawal argue that compared to BOT model, HAM turns out to be a better alternative for the highway construction project. Here, the risk allocation is minimum and financial burden is also shared to a great extent to both public and private and moreover such HAM projects have a better future. "The main reason which has made HAM so popular is its ability to handle risk with regard to financial management. In this aspect government is liable to pay only 40% of the overall cost in five instalments and the rest 60% is the burden of the private party. They can raise the fund by means of equity, loans or any debt and the financial support is given to them only when a certain target is achieved in due course of time otherwise penalty would be imposed over them," the paper says. "The cost of building remains the same across EPC, BOT, and HAM projects; the difference lies in how the investment is recovered. In HAM, no single party bears the entire risk, as both the promoter and the government have a stake. In contrast, EPC and BOT models carry counterparty risks," Ankita Shah said. "The success of these models ultimately depends on traffic volume, which can be unpredictable due to changing government policies and circumstances. For instance, toll plazas are often kept open during elections, affecting revenue. In HAM, the government shares the risk. The future of road construction likely lies in a mix of all three models, with BOT suitable for high-traffic stretches and EPC for socially necessary projects with lower traffic volume," she added.
Time of India
4 days ago
- Business
- Time of India
NHAI pauses fund raise; to focus on improving BOT model to entice investors, says MoS Harsh Malhotra, ETInfra
NEW DELHI: Alarming debt levels have led the National Highways Authority of India (NHAI) to pause fund raise and the high Advt Advt way developer is refining the Build-Operate-Transfer (BOT) Model to attract investors and lighten its balance sheet, a senior government official has said.'We have been able to cut down about ₹85,700 crore of NHAI debt and we are improvising the BOT Model so that the debt level further comes down. Additionally, we have decided not to raise further loans. The roads and highways which have already been constructed, we have plans to remonetise them,' said Harsh Malhotra, Minister for Road Transport and Highways, in an interview to ET to extensive road development undertaken by NHAI primarily through borrowings, the authority's debt had risen to about ₹3.4 lakh crore, raising concerns about implications of massive debt on its a Build-Operate-Transfer (BOT) Model, a private developer is responsible for financing, building and operating a project for a specific concession period in which developer is allowed to recover the development investments by way of user charges or tolls charged. Under such a model, the financial burden on the government is limited. However, the model fell out of favour due to land acquisitions, financial risks faced by private to lukewarm response to BOT Model, in the past several years, the government has resorted to Hybrid Annuity Model (HAM) and Engineering, Procurement, and Construction (EPC) Model of road development, in which the government partly or fully takes up the financial highlighted that the next phase of road development by the central government will be focused on developing 40,000 km of high-speed corridors which will enable vehicle speed of up to 120 km/ to the NHAI, the country has about 63 lakh km of road network, of which 1.46 lakh km are national highways on which 50 per cent of India's traffic is transported.'By 2034, development of almost 40,000 km of high-speed corridors is being aimed which can enable vehicles to run at a speed of 100 km/hr to up to 120 km/hr. The Ministry of Road Transport and Highways' vision for 2047 envisages interstate connectivity and economic corridors which connect states and industrial corridors. Highway speed along with economic growth is the vision of the government,' said per the ministry, as of February 2025, 6,669 km length of high speed greenfield corridors have been awarded with construction completed for 4,610 of the major ongoing projects is the Delhi-Mumbai Expressway, which when completed is expected to reduce the travel time between the two cities from 32 hours to about 12 hours.'The Delhi-Mumbai Expressway is being constructed at a cost of ₹12,500 crore and once completed, it will enable the travel between the cities within 12 hours and will have amenities for travelers after every 100 km,' said from high-speed corridors, the ministry is also focused on developing bypasses or ring roads around major Indian cities in order to enable smooth movement of traffic.'A quadrilateral highway connecting the cities of Chitrakoot, Ayodhya, Varanasi, and Gorakhpur is being constructed. The road will touch the cultural sites. In the future, for all major cities such as Indore, Guwahati and others, bypasses or ring roads are being planned,' said who is a member of Parliament from Delhi, outlined that in order to smoothen the traffic to and from Delhi International Airport, the ministry has proposed the development of a 7-km long underground tunnel.'We have proposed constructing a 7 km long tunnel linking Delhi's Nelson Mandela Road with Urban Extension Road-II in order to smoothen the traffic flow to and from Delhi International Airport,' said Malhotra, adding that several road development projects are underway which will ensure traffic from neighbouring states do not enter the capital and congest the NHAI, a 76 km long Urban Extension Road-II is also being developed, which will divert heavy traffic from neighbouring states away from the national capital. By , ETInfra
Time of India
6 days ago
- Business
- Time of India
State adopts Hybrid Annuity Model for big road projects
1 2 Patna: Road projects, including the expansion of the JP Ganga Path in Patna and new roads along the river in Munger and Bhagalpur, will now be constructed using the Hybrid Annuity Model (HAM), said road construction minister Nitin Nabin on Tuesday. "The first step towards constructing international-standard roads on the lines of the central govt's HAM has been taken with the contract award for the at grade and elevated road along Ganga from Digha to Koilwar. Now, the construction of a four-lane at grade road and a four-lane elevated road along Ganga from Safiyabad to Bariarpur Ghorghat in Munger and from Sultanganj to Sabour via Bhagalpur will also be undertaken under this model," he said at a press conference. He added that this project will be implemented in two sections. "The first section, from Safiyabad to Bariarpur Ghorghat in Munger, will be 42-km long with 12.72km elevated road, featuring two toll plazas, 16 ghats and a rest area spanning approximately 5000sqm. The second section, from Sultanganj to Sabour, will be 40.8-km long, including 26.05km at grade road and 14.76km elevated. One toll plaza will be constructed in this section, while the project will include upgrade of seven ghats, a rest area of approximately 2000sqm and two spurs. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Is it legal? How to get Internet without paying a subscription? Techno Mag Learn More Undo The minister said that the adoption of the HAM was announced during the Bihar Legislative Assembly session. "This method primarily involves a deferred payment system. The HAM-based projects have a construction period of four years, and the contractor is responsible for their maintenance for the next 15 years. During the four-year construction period, the govt will pay only 40% of the total project cost to the contractor, with the remaining 60% invested by the contractor," he said. Patch Nabin lays stone for 2 roads in Kadamkuan Road construction minister Nitin Nabin on Tuesday laid the foundation stone for two road projects in Kadamkuan's ward 36 and 38 in Patna. He said that both the roads in Bankipur assembly constituency will be constructed by Buidco under the chief minister's Urban Integrated Development Scheme. Buidco has also been entrusted with the responsibility of constructing underground drains along with the roads.
The Print
11-07-2025
- Automotive
- The Print
NHAI to bid out 124 road projects worth Rs 3.4 lakh crore in FY26
Gorakhpur – Kishanganj – Siliguri(476 Km) project will be taken up for bids by NHAI under the Hybrid Annuity Model (HAM) mode, while Tharad-Deesa-Mehsana-Ahmedabad – Pkg 1(106 km) project will be taken up for bids by NHAI under Build Operate and Transfer (BOT) model. The total length of the highways likely to be taken up for bids by NHAI in 2025-26 is 6,376 km. New Delhi, Jul 11 (PTI) State-owned National Highways Authority of India (NHAI) has said it plans to bid out 124 highways and expressways projects worth Rs 3.4 lakh crore in 2025-26. The NHAI said Capacity Augmentation of Pampore (Srinagar) to Qazigund section of NH-44(48 km) by construction of service road , grade seperated structures will be be taken up for bids under Engineering Procurement and Construction (EPC) model. National Highways s projects are executed on mainly three modes — Build Operate and Transfer (BOT),Hybrid Annuity Model (HAM) and Engineering Procurement and Construction (EPC). Concession period for projects including maintenance on Build Operate and Transfer (BOT) is 15 to 20 years and on Hybrid Annuity Model (HAM) is generally 15 years. Concessionaire is responsible for maintenance of the respective NHs stretches within the concession period of the project. Only in case of EPC projects, Defect Liability period (DLP) is 5 years for the bituminous pavement works and 10 years for concrete pavement BKS BKS This report is auto-generated from PTI news service. ThePrint holds no responsibility for its content.
