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A passage on Infrastructure and PPP
Introduced in January 2016 to revive investments in road infrastructure projects, ____ has seen good initial success. It is a mix of the EPC (engineering, procurement, and construction) and BOT (build, operate, transfer) models. Under the EPC model, NHAI pays private players to lay roads. The private player has no role in the road’s ownership, toll collection or maintenance (it is taken care of by the government). Under the BOT model though, private players have an active role — they build, operate, and maintain the road for a specified number of years — say 10-15 years — before transferring the asset back to the government.
In the above model the support provided by the govt during the construction phase and later in annuities during the operation phase will be in the ratio of ____. What will come in the place of the blank? (2 marks)
20:80
50:50
40:60
70:30
10:90
Here’s how this whole thing works—
- The blank in the passage should be “Hybrid Annuity Model (HAM)”. It was launched in Jan 2016 to revive investment in Indian roads.
- HAM is a hybrid—halfway between EPC and BOT.
- In EPC: Government pays everything. Private player just builds. That’s it.
- In BOT: Private builder builds, operates, collects toll, takes the risk, and only then hands it back after 10-15 years.
- HAM splits up the risk. Here’s what really happens:
- Govt pays 40% of project cost during construction—this is phased,
- The remaining 60% gets paid back to the private player as annual annuities (with some interest) over several years of operation and maintenance.
- This 40:60 split is the heart of HAM.
Now, let’s look at the options:
- 20:80 — too little upfront government support.
- 50:50 — close, but not the actual policy.
- 40:60 — this is the correct ratio under HAM.
- 70:30 and 10:90 — both way off from the real split.
So, to fill the blanks:
- The model is Hybrid Annuity Model (HAM).
- The government support ratio is 40:60 during construction and annuity repayment phases.
By: Parvesh Mehta ProfileResourcesReport error
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