Hybrid Annuity Model In Highway Projects:A Review Of Current Challenges And Possible Solutions
- Vol.34(4), Oct-Dec
- Pune NICMAR 2019
- 22-32p.
The Hybrid Annuity Model (HAM) was introduced by the Government of India as a project delivery framework for highway projects mainly to ease the financial issues that many developers faced while executing infrastructure projects, especially highways in the Build-Operate-Transfer (BOT) and Engineering, Procurement and Construction (EPC) mode. Even after incorporating terms that were considered to help developers by easing the financial burden on developers and bringing in equity from Government, the response by the private developers were not encouraging. The lukewarm response signals the presence ofunresolved issues. In this paper the authors explore the existing literature to understand the various shortcomings ofthe HAM delivery framework and list down specific areas in the Model Concession Agreement (MCA) that may be bothering the developers to adopt the delivery model enthusiastically. Subsequent to the identification ofthe drawbacks ofHAM, the possible solutions that could ease the concerns ofdevelopers, financiers and the government are identified. The expert viewpoint also suggests that there are concerns ofHAM that need attention and resolution. As the HAM is relatively new, this study is expected to help the practitioners as well as the body ofknowledge to bridge the gap in understanding ofthis hybrid model ofPublic Private Partnership (PPP). In the opinion ofthe authors, HAM may be 'quick-fix' solution that may need to undergo structural changes towards the traditional PPP models as the economic situation eases.