New Delhi: The government on Wednesday approved hybrid annuity model for building roads to fast-track highway projects, revive the Public-Private-Partnership (PPP) mode and attract more investments in the sector.
“The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, has given its approval for the Hybrid Annuity Model as one of the modes of delivery for implementing the highway projects,” said a statement from the ministry of road transport and highways.
Under this model, the government will provide 40 per cent of the project cost to the developer to start work while the remaining investment has to be made by the developer.
“Adopting such a model for projects not found viable on BOT (Toll) mode, shall be more effective in terms of maximising the quantum of kilometers implemented within the available financial resources of the government,” the statement said.
Reacting to the decision, infrastructure stocks posted gains on stock markets. Jaiprakash Associates settled with gains of 0.77 per cent, while Hindustan Construction Company ended the day higher by 2.21 per cent on BSE. Similarly, IRB Infrastructure closed 0.53 per cent up, while ARSS Infrastructure Projects was up 0.97 per cent.
The main objective of the approval is to revive highway projects in the country by making one more mode of delivery of highway projects, it said.
It said by adopting the model, all major stakeholders in the PPP arrangement — the authority, lender and the developer, concessionaire — would have an increased comfort level resulting in revival of the sector through renewed interest of private developers in highway projects and this will bring relief thereby to citizens/travelers in the area of a respective project,” the government said.
It will facilitate uplifting the socio-economic condition of people due to increased connectivity across the length and breadth of the country leading to enhanced economic activity, it said.
Transport minister Nitin Gadkari has recently said, “No one (private players) was ready to participate in the PPP-based projects as they had lost faith (in the previous government). However, to encourage private participation, we have also introduced a hybrid model, where we will share the risk with them.”
