The Hybrid Annuity Model (HAM) was introduced by the National Highways Authority of India (NHAI) in order to encourage private sector participation in the development of highways in the country. Under this model, both the government and private sector entities work together to develop and operate highways.
The HAM concession agreement between NHAI and private sector entities involves seven stages, starting from the award of the project and ending with the operation and maintenance of the highway. The key feature of this model is that the private sector entity is responsible for designing, building, financing and maintaining the highway for a specified period of time, while the government pays the private entity an annuity for the maintenance and operation of the highway.
One of the benefits of the HAM concession agreement is that it reduces the risk for private sector entities by providing a greater degree of assurance in terms of project financing and revenue streams. This is because the government pays the annuity to the private entity over a long-term period, providing a stable revenue stream to the private sector entity.
Another advantage of the HAM concession agreement is that it facilitates the timely completion of highway projects in the country. This is because private sector entities have a vested interest in completing the project on time in order to start receiving annuity payments.
Under the HAM concession agreement, the private sector entity is required to maintain the highway for a specified period of time after completion. This ensures that the highway remains in good condition and is safe for use by motorists.
In conclusion, the HAM concession agreement between NHAI and private sector entities is a win-win situation for both parties. It provides a stable revenue stream for private sector entities while ensuring the timely completion and maintenance of highways in the country. The government benefits from reduced risk and increased private sector participation in the development of infrastructure, leading to improved connectivity and economic growth.