Context-

The pace of national highway construction is expected to slow due to the Hybrid Annuity Model (HAM).

What is Hybrid Annuity Model (HAM)?

A public-private partnership (PPP) model combining aspects of Engineering, Procurement, and Construction (EPC) and Build, Operate, Transfer (BOT) models.

Funding Structure:

• 40%  of the project cost provided by the government as construction support during the construction period.
• 60% of the project cost provided as annuity payments over the operations period, along with interest, to the concessionaire.

Build, Operate, Transfer (BOT) Model

• The government grants a concession to a private company to finance, build, and operate a project.
• The company operates the project for a set period (typically 20-30 years) to recoup its investment, then transfers control back to the government.

Engineering, Procurement, and Construction (EPC) Model

• A project delivery model where contractors handle the project from start to finish.
• EPC contracts can become expensive, and the government has less control over the construction process.