Better fund flow boosts margins in highways' hybrid-annuity model projects

A highway contract that earlier took 24 months for completion is being completed in about 14 months

Achanged financing framework for hybrid-annuity model (HAM) projects in the highways sector is creating better margins for construction companies and resulting in improved execution of projects.

The Union government pumps in 40 per cent of the equity portion in HAM contracts. “Since fund disbursement from the government is on time and happens during the construction phase itself, projects do not get stuck because of financing reasons,” said an official. 

The government portion is usually released in five tranches. Officials in the ministry of road transport said the project execution had been fast-tracked due to the financing framework.

Once loans are secured and project