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Question
Q. Consider the following statements in relation to the Hybrid Annuity Model
Which of the statements given above is/are correct?
Q. Consider the following statements in relation to the Hybrid Annuity Model
Which of the statements given above is/are correct?
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Solution
The correct option is D Neither 1 nor 2
Explanation:
- Statement 1 is incorrect: Hybrid Annuity Model is a mix of the EPC (engineering, procurement, and construction) model and the BOT(Build, Operate, Transfer). It is being used increasingly for various National Highway projects under construction. Under this, 40% of the Project Cost is to be provided by the Government as Construction Support during the construction period and the balance 60% as annuity payments over the operations period along with interest thereon to the concessionaire.
- Statement 2 is incorrect: Since the Government pays back the concessionaire their share of investments as annuity payments, the financial risk is shared by the Government while the O&M risks are borne by the private players.
Explanation:
- Statement 1 is incorrect: Hybrid Annuity Model is a mix of the EPC (engineering, procurement, and construction) model and the BOT(Build, Operate, Transfer). It is being used increasingly for various National Highway projects under construction. Under this, 40% of the Project Cost is to be provided by the Government as Construction Support during the construction period and the balance 60% as annuity payments over the operations period along with interest thereon to the concessionaire.
- Statement 2 is incorrect: Since the Government pays back the concessionaire their share of investments as annuity payments, the financial risk is shared by the Government while the O&M risks are borne by the private players.
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