Question

Q. With reference to the Hybrid Annuity Model for highway construction, consider the following statements:

Which of the above given statements is/are correct?

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

Answer 1

The correct option is B 2 only

Explanation:

In financial terminology hybrid annuity means that the government makes payment in a fixed amount for a considerable period and then in a variable amount in the remaining period. This hybrid type of payment method is called HAM in the technical parlance. Hybrid Annuity Model (HAM) has been introduced by the Government to revive Public Private Partnership highway construction in India.

Statement 1 is incorrect: The design of hybrid annuity model states that the government will contribute to 40% of the project cost in the first five years through annual payments While the remaining payment will be made on the basis of the assets created.
In the hybrid annuity model the first 40% payment is made as a fixed amount whereas the remaining 60% is paid as variable annuity amount after the completion of the project depending upon the value of assets created.

Statement 2 is correct: There is no right of toll collection for the developers under the Hybrid annuity model and rights of revenue collection is the sole responsibility of NATIONAL HIGHWAY AUTHORITY OF INDIA (NHAI).