HAM projects by government making sensation in Development Industry

The recently sanctioned hybrid annuity model (HAM) for road projects have engaged developers in serious bidding for each of the five projects announced during January – March. Under these proposals the government, to enable investments and executing stranded road projects, is going to contribute for 40% of the total cost and would then release the same in hands of builders to carry on the road construction.

Hybrid annuity model differs with BOT in many ways as HAM leads to sole responsibility of National Highway Authority of India (NHAI) to collect revenue within which developers would be given annual installments over a period of time eventually owes to low risk yet slow returns while BOT goes for “Build- Operate- Transfer” mechanism.

As holds next position after US for largest road networking spread across 4.87 million km, the country aims to award 25,000 km of road projects in the financial year 2017 under the ministry of road transport and highways and NHAI which is more than the double of what actually achieved in financial year 2016 i.e. 10,000 km.

In the race of bidding, many elite names took active participation however leading road developers such as IRB Infrastructure have not shown any interest even though government has offered 80% of prior land acquisition and forest clearance in awards, howbeit continues to bid for BOT Projects. To this, Virendra Mhaiskar, Chairman And Managing Director, IRB Infrastructure responded, “Competition is intense and it is not making any sense (to bid)… This sector has perennial problem that whenever the government comes out with large number of projects we all contractors go into overkill and mess it up.”