Question

Q. Consider the following statements related to Hybrid Annuity Model(HAM):

Select the correct answer using the code given below:

• A. 1 only
• B. 2 only
• C. Both 1 and 2
• D. Neither 1 nor 2

Answer 1

The correct option is D Neither 1 nor 2

Explanation:

• Statement 1 is incorrect: Hybrid Annuity Model (HAM) is a mix of the EPC (engineering, procurement, and construction) and BOT (build, operate, transfer) models. Under this model, 40% of the Project Cost is paid by the Government/ Executing Agency as a Construction Support/ Grant to the private developer and the balance of 60% is to be arranged by the successful bidder during the construction period.
• Statement 2 is incorrect: In the HAM model, the private partner continues to bear the operations and maintenance risk, but the financing risk is now shared with the government. The private developer is paid back the amount of 60% along with interest and Operation & Maintenance (O&M) payment in the form of annuities during the operation period.