Consider the following passage quot It is a Public Private Partnership PPP model in which the g...........

Economic Affairs Investment Models

Consider the following passage:

"It is a Public-Private Partnership (PPP) model in which the government bears a part of the cost of the project initially, and the developer has to raise the remaining part. The cost born by the developer is repaid by the government after the completion of the project, through annual payments." The above paragraph describes which type of PPP model?

Build Operate and Transfer (BOT) Annuity Model .

Build Operate and Transfer (BOT) Toll Model .

Engineering, Procurement and Construction (EPC) Model.

Hybrid Annuity Model (HAM) Model

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Explanation:

Various types of PPP Model followed by the Government in India are:

The Build Operate and Transfer (BOT) Annuity Model: Under BOT annuity, a developer builds a highway, operates it for a specified duration and transfers it back to the government. The government starts payment to the developer after the launch of the commercial operation of the project. Payments are made on a six-month basis.
BOT Toll Model: In this toll-based BOT model, a road developer constructs the road and he is allowed to recover his investment through toll collection. This toll collection will be over a long period which is nearly 30 years in most cases. There is no government payment to the developer as he earns his money invested from tolls.
Engineering, Procurement, and Construction (EPC) Model: Under this model, the cost is completely borne by the government. Government invites bids for engineering knowledge from the private players. Procurement of raw material and construction costs are met by the government. The private sector‘s participation is minimum and is limited to the provision of engineering expertise. A difficulty of the model is the high financial burden for the government.
The Hybrid Annuity Model (HAM):
In India, the new HAM is a mix of BOT Annuity and EPC models. As per the design, the government will contribute to 40% of the project cost in the first five years through annual payments (annuity). The remaining payment will be made on the basis of the assets created and the performance of the developer.
Here, a hybrid annuity means the first 40% payment is made as a fixed amount in five equal instalments whereas the remaining 60% is paid as variable annuity amount after the completion of the project depending upon the value of assets created.
As the government pays only 40%, during the construction stage, the developer should find the money for the remaining amount.
Here, he has to raise the remaining 60% in the form of equity or loans.
There is no toll right for the developer. Under HAM, Revenue collection would be the responsibility of the National Highways Authority of India (NHAI).