Hybrid Annuity model for implementing highway projects

The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, has given its approval for the Hybrid Annuity Model as one of the modes of delivery for implementing the Highway Projects. Adopting such a model for projects not found viable on BOT (Toll) mode shall be more effective in terms of maximizing the quantum of kilometers implemented within the available financial resources of the Government. The main object of the approval is to revive highway projects in the country by making one more mode of delivery of highway projects.

By adopting the Model as the mode of delivery, all major stakeholders in the PPP arrangement – the Authority, lender and the developer, concessionaire would have an increased comfort level resulting in revival of the sector through renewed interest of private developers/investors in highway projects and this will bring relief thereby to citizens / travelers in the area of a respective project.

It will facilitate uplifting the socio-economic condition of the entire nation due to increased connectivity across the length and breadth of the country leading to enhanced economic activity.

Background:

The decision taken on 11.09.2014 by the CCEA has delegated the authority for deciding on the mode of delivery of highway projects to Ministry of Road Transport & Highways.

The erstwhile Planning Commission developed the first version of the Model Concession Agreement (MCA) for highways in 2006. This was done considering the need to standardize documents and processes for the PPP framework in the country for ensuring uniformity, transparency and quality in development of large-scale infrastructure projects including highways. Subsequently, the Planning Commission had developed various other versions of the MCA for highways considering the different PPP modes like BOT (Toll), BOT (Annuity) and OMT addressing to a significant extent, the changing needs of the sector.