Hybrid Annuity Model Concession Agreement Nhai

The introduction of investor-friendly changes in the Model Concession Contract (MCA) for highway construction under the Hybrid Annuity Model (HAM) has been welcomed by the industry, and experts say the route is expected to become attractive to developers again. After the policy change in the mid-1990s, which gave high priority to highway development in India, India accelerated the development of highways. The National Highway Development Programme (NHDP) was launched in 1997 to develop an extensive motorway network in a relatively short period of time. The PPP (PPP) model has been adopted for highway development in India, as it has the advantages it offers over traditional models. In accordance with the decision in principle, a large number of motorway development contracts were awarded under the BOT (Build, Operate and Transfer) variant of the PPP model, and other variants were awarded with the development of the DBFOT (Design, Construction, Finance, Operation and Transfer) models of the policy and, finally, the National Highway Authority of India (NHAI) adopted the hybrid annuity Model (HAM) for the development of motorways at a pace. accelerated. This paper first discusses the different features of HAM in the Indian road sector and then compares the Annuity Model (HAM) hybrid to the traditional DBFOT road development model to determine the benefits and risks of HAM, both for customers and contractors, which will help stakeholders analyze the latest trends in HAM projects awarded by NHAI. As you know, HAM is a kind of win-win model, both for the government and for the dealers; Unlike the Engineering Procurement and Construction (EPC) model, the government does not have to bear the full cost of construction at HAM. and a developer`s skin in the game is much less in HAM than under the build-operate transfer (BOT) model. However, HAM`s share in the National Highways Authority of India`s (NHAI) allocation of motorway projects rose from a peak of 55% in 2016-17 to 28% in 2019-20. Under the new rules, the first instalment of the advance is released after 5% of the progress of the work and the second after 10% progress.

Similarly, the last instalment of the advance is paid after reaching 90% of physical progress. The measure will help dealers better meet their working capital needs and should also provide lenders with more comfort in the event of termination. In the TOT model, the right to collect and monopolize royalties for certain operational highway (NH) projects built with public funds is granted to concessionaires (developers/investors) for a predetermined concession period, upon advance payment of a lump sum to NHAI. This transfer of rights is based on the toll revenue potential of the identified NH projects. The operation and maintenance (O&M) obligations of such projects are due to the concessionaire until the end of the concession period. The concessionaires of these projects shall be designated under a transparent and uniform procurement procedure within a pre-established and approved implementation framework. CiFAR`s Rajeshwar Burla said: “The recent changes to MCA with a deferral of the bank interest rate to MCLR for the calculation of interest rates on annuities are a very positive development. Interest on annuities for HAM projects is significant, with around 45% of total entries during the concession period. So far, the low bank interest rate has reduced the total inflows of a HAM project. The second problem was the deferral of interest rates.

The reduced rate transfer was done with a delay for the loan to the project. This is also reflected in the growing difference between the weighted average credit rate and the RBI bank rate for the current year. The Ministry of Road Transport and Motorways has introduced the hybrid annuity model for the implementation of motorway projects to promote private sector participation through appropriate incentives. . . .