Model Concession Agreement Hybrid Annuity Model

Interest rates for future HAM projects are now linked to the average marginal costs of funds based on a credit interest rate of the five major commercial banks planned, relative to the interest payable under the existing agreement. The Ministry of Road Traffic and Highways has adopted a hybrid annuity model for the implementation of highway projects in order to encourage private sector participation through appropriate incentives. The goal is to maximize the amount of highway projects implemented in the government`s available financial resources. Under this model, 40% of the project costs must be paid by the government as a „construction aid“ for the private developer during the construction period, and 60% of the balance in the form of annuity payments during the concession period, as well as interest on the amount owed to the dealer. There is a separate provision for government payments made by the government to the dealership. The private party is not obliged to bear the risk of trafficking. All payments were indexed by a multi-price index, which is a weighted average of WPI and CPI (IW) at 70:30 bases. This reduces the risk of inflation for the developer. In the TOT model, the right to collect and usurp royalties for certain operational projects of national highway (NH) built with public funds is granted to concessional dealers (developers/investors) predetermined with a prepayment of a lump sum to NHAI. This transfer of rights is based on the potential for toll revenue from identified NH projects. The operating and maintenance obligations (O-M) of these projects must be met by the dealer until the concession deadline. Dealers of such projects are designated as part of a pre-defined implementation framework and approved as part of a transparent and consistent procurement process.

The main changes introduced in THE revised HAM concession-type concession agreement are – the interest in pensions for HAM projects is considerable and accounts for about 45 per cent of total inflows during the concession period. In order to address the key issues faced by stakeholders under the existing concession agreement and to increase the availability of road projects on the basis of the hybrid model (HAM), the Ministry of Road Transport and Highways adopted a revised concession-type agreement for new HAM-based road projects on 10 November 2020. Hybrid annuity model for the implementation of motorway projects. Download The Economic Times News app for daily market updates and live news. This report is written by an external party. BloombergQuint does not guarantee the accuracy of its content and is not responsible for it in any way. The content of this section does not constitute investment advice. To do this, you should always consult an expert based on your individual needs.

The views expressed in the report are those of the Maklerunde and do not reflect the views of BloombergQuint. DEATH: MONETIZATION OF PUBLIC FUNDS, OPERATIONAL NATIONAL HIGHWAY PROJECTS. The government approved the proposal to allow NHAI to monetize publicly funded NH projects, which are in service and generate toll revenue for at least two years after the cod through the transfer (ToT) model, subject to case-by-case approval by the MoRth/NHAI competent authority.