Question
The Government of India introduced the HAM in January
2016 with the aim to increase the number of highway projects that can be implemented while sharing financial risk with private developers. Which of the following correctly represents HAM?Solution
A HAM project is a highway project implemented using the Hybrid Annuity Model. The Government of India introduced the HAM in January 2016. The model aims to increase the number of highway projects that can be implemented while sharing financial risk with private developers.
- The government provides 40% of the project cost as construction support to the developer.
- The developer receives the remaining 60% of the project cost as annuity payments over the concession period.
- The government also pays the developer for operations and maintenance (O&M).
- The payments are inflation-indexed to mitigate the risk of inflation for the developer.
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