The NHAI has proposed a hybrid model containing features of toll and annuity schemes of highways development under PPP in order to avoid BOT annuity model of road construction.

Both BOT (toll) and BOT (annuity) are part of the PPP route. While in BOT (toll), the operator is entitled to earn toll revenues through the concession period, in BOT (annuity), the operator gets returns on his investments in form of semi-annual payments from NHAI. Additionally, there is a provision of viability gap funding (VGF) up to 40 per cent of the project cost in toll-based projects, while annuity-based projects do not have such provision.

However, under the proposed scheme, in the scenario of VGF required for a project being more than 40 per cent, the annuity payment will be made for the funding requirement in excess of 40 per cent. Considerably, even while the government will make the incremental payment, the concessionaire will be allowed to collect the toll through the concession period.

Also See:

NHAI formulates new norms for bidders (18-June-09)