How new HAM criteria puts all on equal footing
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ROADS & HIGHWAYS

How new HAM criteria puts all on equal footing

21 Jul 2022 CW Team
The Hybrid Annuity Model (HAM) has become the backbone of Bharatmala 1 & 2. Around 70 per cent of projects are given on HAM by NHAI. Under HAM, NHAI funds 40 per cent of the construction cost while 60 per cent is funded by the developer with own finance. NHAI makes a payment of 60 per cent of the construction cost along with interest on the outstanding amount (bank rate +3 per cent) and O&M cost over a period of 15 years to the developer, who is required to maintain the road for 15 years. As NHAI takes the responsibility of toll collection, the developer is not exposed to toll risk. Hence,this was a preferred mode for developers.

However,developers have become aggressive and started bidding with a low O&M budget to get a better NPV (net present value). Having realised this,NHAI has suggested changes in HAM biddings.

To read the full version, CLICK HERE.

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The Hybrid Annuity Model (HAM) has become the backbone of Bharatmala 1 & 2. Around 70 per cent of projects are given on HAM by NHAI. Under HAM, NHAI funds 40 per cent of the construction cost while 60 per cent is funded by the developer with own finance. NHAI makes a payment of 60 per cent of the construction cost along with interest on the outstanding amount (bank rate +3 per cent) and O&M cost over a period of 15 years to the developer, who is required to maintain the road for 15 years. As NHAI takes the responsibility of toll collection, the developer is not exposed to toll risk. Hence,this was a preferred mode for developers. However,developers have become aggressive and started bidding with a low O&M budget to get a better NPV (net present value). Having realised this,NHAI has suggested changes in HAM biddings. To read the full version, CLICK HERE.

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