Road Builders Face Order Challenges Amid Shift to BOT and HAM Models

17 Dec 2024 CW Team

India Ratings and Research reported that small and mid-sized road construction firms may struggle to secure new orders in the medium term due to a decline in government-issued engineering, procurement, and construction (EPC) contracts. The agency attributed this trend to the government's increased preference for build-operate-transfer (BOT) and hybrid annuity model (HAM) projects over traditional EPC contracts. The shift is expected to intensify competition in the EPC segment, favoring large players with strong financials. Smaller firms, often lacking the significant upfront capital required for BOT and HAM projects, may face barriers to participation, coupled with heightened execution and funding risks. BOT projects, in particular, pose additional challenges such as toll risks and slow financial closures. Although 80% of the required right of way is typically available in advance, delays in clearing remaining sites have caused discomfort among lenders. However, the BOT and HAM models also demand a long-term commitment from developers, often spanning 15 years, which fosters more stable business profiles compared to the EPC model. Some mid-sized EPC developers are gradually transitioning to HAM projects and have begun securing orders under this framework. "The government's pivot to BOT and HAM models will transform the sector's dynamics," noted Abhash Sharma, Senior Director and Group Head Ratings Mid Corporates at Ind-Ra. He emphasised that companies with strong credit profiles and long-term strategies are better positioned to endure, while others may need to act as EPC contractors for larger developers, facing increased competition and margin pressures. For mid-sized EPC firms, geographic and client concentration remains a key concern, with 40–60% or more of their revenue often tied to a few top clients, heightening customer-related risks. Additionally, these firms frequently grapple with stretched working capital cycles and heavy reliance on creditor-backed letters of comfort, particularly among lower-rated entities. As the government reverts to a refined BOT/HAM project model, India Ratings foresees a challenging future for small and mid-sized EPC players, as the focus shifts to construction quality and achieving financial closure before project initiation. (ET)

India Ratings and Research reported that small and mid-sized road construction firms may struggle to secure new orders in the medium term due to a decline in government-issued engineering, procurement, and construction (EPC) contracts. The agency attributed this trend to the government's increased preference for build-operate-transfer (BOT) and hybrid annuity model (HAM) projects over traditional EPC contracts. The shift is expected to intensify competition in the EPC segment, favoring large players with strong financials. Smaller firms, often lacking the significant upfront capital required for BOT and HAM projects, may face barriers to participation, coupled with heightened execution and funding risks. BOT projects, in particular, pose additional challenges such as toll risks and slow financial closures. Although 80% of the required right of way is typically available in advance, delays in clearing remaining sites have caused discomfort among lenders. However, the BOT and HAM models also demand a long-term commitment from developers, often spanning 15 years, which fosters more stable business profiles compared to the EPC model. Some mid-sized EPC developers are gradually transitioning to HAM projects and have begun securing orders under this framework. The government's pivot to BOT and HAM models will transform the sector's dynamics, noted Abhash Sharma, Senior Director and Group Head Ratings Mid Corporates at Ind-Ra. He emphasised that companies with strong credit profiles and long-term strategies are better positioned to endure, while others may need to act as EPC contractors for larger developers, facing increased competition and margin pressures. For mid-sized EPC firms, geographic and client concentration remains a key concern, with 40–60% or more of their revenue often tied to a few top clients, heightening customer-related risks. Additionally, these firms frequently grapple with stretched working capital cycles and heavy reliance on creditor-backed letters of comfort, particularly among lower-rated entities. As the government reverts to a refined BOT/HAM project model, India Ratings foresees a challenging future for small and mid-sized EPC players, as the focus shifts to construction quality and achieving financial closure before project initiation. (ET)

Infrastructure Energy

14 Oct 2025

Mizoram To Build Rs 139 Billion Pumped Storage Power Plant

Mizoram Chief Minister Lalduhoma on Friday announced plans to construct a 2,400 MW pumped storage hydroelectric power plant in Hnahthial district, marking a major step towards achieving energy self-sufficiency in the state. Addressing the Mizo Students’ Union general conference in Hnahthial town, the Chief Minister said the plant would be developed across the Darzo Nallah, a tributary of the Tuipui river. Once operational, the project is expected to play a pivotal role in meeting Mizoram’s rising electricity demand and reducing dependence on imported power. Officials from the State Power..

Infrastructure Energy

14 Oct 2025

Centre Plans Nationwide Opening Of Power Retail Market

India is preparing to open up its retail electricity market to private companies nationwide, effectively ending the long-standing monopoly of state-run power distributors in most regions, according to a draft bill released by the Union Power Ministry on Friday. The move will enable major private sector players — including Adani Enterprises, Tata Power, Torrent Power, and CESC — to expand their presence across the country’s electricity distribution landscape. A similar reform attempt in 2022 had faced strong opposition from state-run distribution companies (discoms), which currently dom..

Infrastructure Energy

14 Oct 2025

CEA Sets 100 GW Nuclear Target For India By 2047

In a landmark step marking its 52nd Foundation Day, the Central Electricity Authority (CEA) unveiled an ambitious roadmap to develop 100 gigawatts (GW) of nuclear power capacity by 2047, aligning with India’s long-term Net-Zero commitment and energy security objectives. The event, held at the Central Water Commission auditorium in New Delhi’s R.K. Puram, was attended by Pankaj Agarwal, Secretary, Ministry of Power, who served as the Chief Guest. The roadmap sets out a detailed plan to expand India’s nuclear capacity from its current level of approximately 8,180 MW as of early 2025, outl..