Hybrid Annuity Model Debuts in Nellore Circle for Rs 3,000 Crore Urban Infra Works
Under HAM, project costs and risks are shared between the government and private developers.
Nellore: For the first time, the Hybrid Annuity Model (HAM), a popular public-private partnership mechanism widely used in highway projects, is being rolled out for large-scale urban infrastructure works worth nearly Rs 3,000 crore across 26 urban local bodies in Nellore, Chittoor, Tirupati and Prakasam districts.
Under HAM, project costs and risks are shared between the government and private developers.
Typically, 40 per cent of the project cost is borne by the government during construction, while 60 per cent is invested by the developer, who later recovers it through fixed annuity payments, interest and operations & maintenance (O&M) charges over 10 years.
Officials say the deployment of HAM in municipal projects would be a game-changer, ensuring sustainable financing, timely execution and long-term maintenance without overburdening local bodies.
In a first-of-its-kind move for civic infrastructure, the municipal administration department has structured repayments so that developers’ 60 per cent investment would be returned in installments over 10 years at 9.8 per cent interest, beginning after a two-year concession period.
Developers will also handle O&M responsibilities for a decade, easing the financial and administrative burden on municipalities.
The massive funding pool is being mobilized through a mix of the Asian Infrastructure Investment Bank, Urban Infrastructure Development Fund and AMRUT 2.0. The AIIB offers up to 70 per cent of the project cost as grant funding. Currently, it is supporting the Giddalur, Chimakurthy and Kanigiri municipalities.
The UIDF is a national housing bank initiative that provides grant-based funding with zero repayment burden for urban local bodies. It is Already funding projects in Kandukuru, Kavali, and Nellore corporation.
AMRUT 2.0 is a central-state initiative covering loan repayment, ensuring no direct financial burden on local bodies.
The projects will focus on water supply for economically weaker sections, housing colonies, rejuvenation of water bodies, augmentation of water treatment plants, construction of storage reservoirs, and underground drainage systems.
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Infographics:
Key allocations under AMRUT 2.0:
· Nellore District – Rs 449.60 crore (Water supply: 199.11cr; Sewage & Septage: 230.95cr; water bodies: 19.54cr)
· Prakasam district – Rs 832.99cr (water supply: 771.06cr; sewage & septage: 55.89cr; water bodies: 6.04cr)
· Tirupati district – Rs 214.10cr (water supply: 190.36cr; sewage & septage: 11.46cr; water bodies: 12.28cr)
· Chittoor district – Rs 125.92cr (water supply: 77.79cr; sewage & septage: 34.43cr; water bodies: 13.70cr)
Grand total for Nellore circle under AMRUT 2.0: Rs 1,622.61cr
Additional funding highlights
· AIIB water supply & septage management: Rs 400.84cr
· UIDF 2023-24: Rs 603.17 cr (Nellore: 267.06cr, Tirupati: 282.87cr, Chittoor: 53.24cr)
· UIDF 2024-25: Rs 463.32cr (Nellore: 201.12cr, Tirupati: 262.20cr).
With Rs 3,000 crore of projects already in motion, the initiative is expected to significantly upgrade civic infrastructure in Andhra Pradesh’s southern districts, benefitting lakhs of urban residents.
Superintendent engineer of public health department T Mohan said they would start the works after the tender process either by December 2025 or January 2026. He said urban development minister P Narayana took the initiative to mobilise funds from UIDF, AIIB and Amrut following a green signal from chief minister Chandrababu Naidu.
