Hybrid Annuity Model (HAM)

  • Before we get into HAM we should know few more models that are existing in PPP. They are:
    • BOT Annuity
      • Here the private entity Built the project and Operate it for few years and Transfer it to the govt. The govt pays money on annuity basis, let us say for every 6months. The risk falls completely on the private entity.
    • BOT toll
      • The private entity Built, Operate till it recovers the money through toll and transfer it. Here also the risk completely falling on the private side
    • EPC (Engineering, Procurement and Construction)
      • The complete investment bearer is the govt and get private help for the technical expertise like engineering
      • The problem with it is financial resources
  • The problem with the above models are financial burden and risk is completely aligning to one side i.e., either on private or on the govt. So due to the lack of resources the projects are stalled which in turn create NPAs and impacting infrastructure development
  • To overcome this situation the govt has come up with HAM, where the financial burden and risk is shared among, in which the govt will provide 40% of the project cost in initial stage itself and rest will be raised by private entity through equity or loans
  • It is a mix of earlier two models i.e., BOT Annuity and EPC.
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