Explanation:

Solution. Statement 1 is correct: Under Build, Operate and Transfer (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 commercial operation of the project. Payment will be made on a six month basis. Statement 2 is not correct: Under Engineering, Procurement and Construction (EPC) 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. Statement 3 is correct: In financial terminology hybrid annuity means that the government makes payment in a fixed amount for a considerable period and then in a variable amount in the remaining period. In India, the new Hybrid Annuity Model (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.