90% of HAM road projects in India progressing well

New Delhi

More than 90% of road projects under the hybrid annuity model (HAM) in India are being developed on time, according to a report on Wednesday. These projects, awarded by the Ministry of Road Transport and Highways (MoRTH), showcase steady progress, highlighting the model's growing importance in infrastructure development.

The success of HAM projects is attributed to efficient provisions like ensuring 80% right-of-way (ROW) availability before construction begins, handling project adjustments for unavailable ROW, and protection against inflation and interest rate changes.

Report indicates that 66% of the under-construction HAM road projects are on or ahead of schedule, while 26% face minor delays or await timeline extensions. These delays are often due to uncontrollable factors like heavy rains, mining bans, or ROW issues. Only 8% of the projects encounter significant execution challenges.

Anand Kulkarni, Director of Crisil Ratings, emphasized the structural benefits of HAM. "Completed projects typically see strong credit profiles due to steady cash flows from central counterparties," he said.

The financial stability of these projects is also notable. Crisil estimates an average debt service coverage ratio of 1.3-1.4 times, which supports the credit health of these projects.

Over the past five fiscal years, excluding 2024, a quarter of MoRTH’s road projects were awarded under HAM, underlining its significance. The relaxation of bidding norms has also doubled the number of bidders in recent years, further boosting the model's popularity.