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OUR BLOG

Model Concession Agreement Nhai Hybrid Annuity

By pierre.shaun@gmail.com | In Uncategorized | on December 13, 2020

In the TOT model, the right to collect and usurp royalties for certain operational projects of national highway (NH) built with public funds is granted to concessional dealers (developers/investors) predetermined with a prepayment of a lump sum to NHAI. This transfer of rights is based on the potential for toll revenue from identified NH projects. The operating and maintenance obligations (O-M) of these projects must be met by the dealer until the concession deadline. Dealers of such projects are designated as part of a pre-defined implementation framework and approved as part of a transparent and consistent procurement process. The Ministry of Road Traffic and Highways has adopted a hybrid annuity model for the implementation of highway projects in order to encourage private sector participation through appropriate incentives. The goal is to maximize the amount of highway projects implemented in the government`s available financial resources. Under this model, 40% of the project costs must be paid by the government as a “construction aid” for the private developer during the construction period, and 60% of the balance in the form of annuity payments during the concession period, as well as interest on the amount owed to the dealer. There is a separate provision for government payments made by the government to the dealership. The private party is not obliged to bear the risk of trafficking. All payments were indexed by a multi-price index, which is a weighted average of WPI and CPI (IW) at 70:30 bases.

This reduces the risk of inflation for the developer. Interest rates on annuities for HAM projects are considerable and amount to about 45% of total inflows during the concession period. Download The Economic Times News app for daily market updates and live news. Hybrid annuity model for the implementation of motorway projects. DEATH: MONETIZATION OF PUBLIC FUNDS, OPERATIONAL NATIONAL HIGHWAY PROJECTS. The government approved the proposal to allow NHAI to monetize publicly funded NH projects, which are in service and generate toll revenue for at least two years after the toll transfer process, (ToT) case by case, subject to authorization from the MoRth/NHAI competent authority.

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