Hybrid Annuity model for implementing highway projects
Q. Which new mode/modes of delivery for implementing the Highway Projects is/are approved recently by the government?- Published on 29 Jan 16a. Hybrid annuity
b. BOT
c. DBOT
d. All of the above
ANSWER: Hybrid annuity
The union government on Wednesday approved the hybrid annuity model for building national highways. The move will speed up the construction of roads in the country by renewing interest of private developers in highway projects as the risk will be distributed between the government and the private players. Under the public-private partnership (PPP) model, the government will invest 40 per cent of the construction cost for building highways and the balance will come from the private developer. The government will invest money in five equal instalments based on the targeted completion of the road project. The private developer will recover his investment from the government by receiving annuity payments over a period of 15 years. Under this model, the highway toll tax will be collected by the government unlike the build, operate and transfer (BOT) toll model where the private sector collects it. So, there is no revenue or traffic risk on the part of the developer. A government official said this model will double the speed of highway construction in the country as the government will no longer will be dependent on its limited financial resources and the expertise of private sector will be utilised to operate and maintain the roads.
