NEW DELHI: The National Highways Authority of India (NHAI) is mulling over the proposals to cut the upfront payment to highway builders by half during construction by modifying the Hybrid Annuity Model (HAM), which has become popular in recent years. Against the current norm of paying 40% of the project cost during construction and the remaining amount in equal installments during the remaining period of contract, the authority is considering paying only 20% of the cost during the construction period.
The proposal has to get the go ahead from the government for implementation. Sources said the change, if approved, will increase private investment in the sector as the highway builders will put in more funds even during the construction period. Under the HAM model, the contractors have no risk as the responsibility of toll collection lies with the NHAI.
This has become the most preferred mode for private investment in the sector as there has been no takers for the projects offered on the Build-Operate-Transfer (BOT) mode. It has been more than a year since any BOT project has been bid out.
Currently, around 55% of the projects under the flagship Bharatmala scheme are being bid out under the HAM and officials said this share may touch 70% in the next few months. “The HAM has stabilised in recent years and now we have several bidders in this space. They are ready to take up projects even if the government reduces the upfront payment. That will also help us to roll out more projects,” said an official.
Currently, around 49 highway construction companies pre-qualify for projects costing up to Rs 1,769 crore under the HAM.