Question

Which of the following statement is/are NOT correct about the hybrid annuity model?

• A. HAM is a rational approach adopted for allocation of risks between the PPP partners.
• B. Under HAM the government will provide 40 percent of the project cost to the developer to start work
• C. The private developer will recover his investment from the government by receiving annuity payments over a period of 15 years
• D. Under this model, the highway toll tax will be collected by the private sector that reduces the traffic risk.

Answer 1

The correct option is D Under this model, the highway toll tax will be collected by the private sector that reduces the traffic risk.

The adoption of the HAM model as the mode of delivery, all major stakeholders in the PPP arrangement - the Authority, lender and the developer, concessionaire - will have an increased comfort level. The increased comfort level will result in revival of the sector through renewed interest of private developers/investors in highway projects and this will bring relief thereby to citizens/travelers in the area of a respective project. It will facilitate uplifting the socio-economic condition of the entire nation due to increased connectivity across the length and breadth of the country leading to enhanced economic activity.
Under HAM the government will provide 40 percent of the project cost to the developer to start work while the remaining investment has to be made by the developer.
Under this model, the highway toll tax will be collected by the government unlike the build, operate and transfer (BOT) toll model where the private sector collects it. So, there is no revenue or traffic risk on the part of the developer.