Highway development: Norms for govt aid to HAM projects eased

The government will now pay the upfront construction payment support to a highway project concessionaire under the hybrid annuity model (HAM) model in 10 tranches against 5, subject to the overall ceiling of 40% of the project cost.

The frequenting of the installments, aimed at making the model more attractive for the concessionaires, comes in the backdrop of declining share of the HAM model in the overall highway project awards by the National Highways Authority of India (NHAI). From its peak of 55% in 2016-17, HAM’s share in overall projects awards by NHAI fell to just 28% in 2019-20. Frequenting of the installments will help concessionaires to better manage their working capital requirement.

The release of upfront payment during the construction period will be linked to the physical progress of the project. First payment will be released after 5% of the physical progress made and the second one after making 10% progress. In the same way, the last installment of 40% of the project cost will be disbursed after achieving 90% of the physical progress.

Under HAM, the NHAI pays the developer the balance 60% of the project cost as annuity payments over the operations period along with interest thereon. Toll fee collection from the highway projects developed under the HAM is the responsibility of the authority.

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