The Union government would soon re-adopt the Build- Operate-Transfer (BOT) model for the execution of highway projects over the Hybrid Annuity Model (HAM)
- In order to foster private involvement, HAM was brought in by the government in 2015 and it served the purpose for a few years before banks red-flagged lending for these ventures.
- HAM is a mixture of formats for Engineering, Procurement, and Construction (EPC) and BOT.
- Need to Re-Adopt: BOT will see private investment coming in upfront, which is expected to benefit the centre as the exchequer will not have to pump in money in such projects.
PUBLIC-PRIVATE PARTNERSHIP (PPP) MODELS
The commonly-adopted PPP model includes:
- BOT: It is a traditional PPP model in which it is the responsibility of the private partner to design, develop, operate (during the time under contract) and move the facility back to the public sector.
o Partners in the private sector have to fund the project and assume responsibility for the design and maintenance of it.
o The public sector would make it possible for partners in the private sector to raise money from consumers.
- Build-Own-Operate (BOO): In this model, the private party will maintain control of the newly constructed facility.
o The public sector partner decides, on mutually agreed terms and conditions, to 'purchase' the goods and services provided by the project.
- Build-Own-Operate-Transfer (BOOT): In this variant of BOT, the project is passed to the government or private operator after a negotiated period of time. For the construction of highways and ports, the BOOT model is used.
- Build-Operate-Lease-Transfer (BOLT): In this method, the government grants a concession to a private company to construct (and probably design) a facility, to own the facility, to rent the facility to the public sector, and to transfer ownership of the facility to the government at the end of the lease term.
- Design-Build-Operate-Transfer (DBOT): In this model, the private party is solely responsible for the design, development, finance, and operation of the project for the concession duration.
- Lease-Develop-Operate (LDO): Either the government or the public sector agency maintains ownership of the newly developed infrastructure facility in this form of investment model and collects payments under a lease arrangement with the private promoter. In the construction of airport facilities, this is often pursued.
- Hybrid Annuity Model (HAM): The central government pays 40 percent of the cost of the project and the developer arranges the remaining number.