Synopsis
In this report, CareEdge Ratings presents its findings on the (i) study on 374 National Highways Hybrid Annuity Model (HAM) projects, (ii) pace of project execution, and (iii) impact on sponsors, especially in light of heightened competition and execution woes.
Description of Sample Set used for HAM Study
The HAM model has consistently been the preferred modefor awarding highway projects, accounting for nearly 55% of the total projects awarded between FY21 and FY24.
CareEdge Ratings has conducted an extensive analysis of 374 Hybrid Annuity Model (HAM) projects awarded by the National Highways Authority of India (NHAI) between 2015 and 2024. These projects span an impressive aggregate length of approximately 16,000 Km and have a total Bid Project Cost (BPC) exceeding Rs 4.03 lakh crore. As of September end 2024, 42% of the sample BPC, aggregating over Rs 1.65 lakh crore, have been commissioned, while around 45% of the projects, aggregating over Rs 1.80 lakh crore, are in the construction phase, and the balance of 13% are awaiting appointed date to commence construction.
Heightened Execution Challenge
Among the under-construction projects, 55%, with an aggregate BPC of Rs 1 lakh crore, have been delayed beyond six months. In a previous article dated April 30, 2024, CareEdge Ratings highlighted that around 33% of the projects were delayed as of June 30, 2023; this figure has risen to approximately 55% as of December 2024. The sponsor profile continues to be diverse across the delayed projects. While grant of extension of time (EOT) mitigates the project specific risk to an extent, it impacts overall construction pace and profitability of roads developers.