New hybrid mode for highway projects to provide funds to developers

Cabinet clears new model to revive public-private-partnership

GN Bureau | January 27, 2016



In a bid to revive public-private-partnership (PPP) mode and attract more investments in roads projects the government today approved hybrid annuity model. The new mode will fast-track highway projects considerably.

"The cabinet committee on economic affairs, chaired by the prime minister Narendra Modi, has given its approval for the hybrid annuity model as one of the modes of delivery for implementing the highway projects," said a statement from the ministry of road transport and highways.

Under this model, the government will provide 40 per cent of the project cost to the developer to start work while the remaining investment has to be made by the developer.

The main objective of the approval is to revive highway projects in the country by making one more mode of delivery of highway projects.

It said by adopting the model, all major stakeholders in the PPP arrangement - the Authority, lender and the developer, concessionaire would have an increased comfort level resulting in revival of the sector through renewed interest of private developers/investors in highway projects and this will bring relief thereby to citizens/travelers in the area of a respective project," the government said.

"Adopting such a model for projects not found viable on BOT (Toll) mode, shall be more effective in terms of maximising the quantum of kilometers implemented within the available financial resources of the government," the statement said.

An important feature of the hybrid annuity model for highways development is the rational approach adopted for allocation of risks between the PPP partners - the government and the private partner i.e. the developer/investor.

While the private partner continues to bear the construction and maintenance risks as in BOT (Toll) projects, it is required only to partly bear financing risk, it said.

"Further, the developer is insulated from revenue/traffic risk and the inflation risk, which are not within its control," the statement said.

Cyber security pacts
The cabinet also approved the Memorandum of Understandings (MoUs)signed between Indian Computer Emergency Response Team (CERT-In) with its counterparts in Malaysia, Singapore and Japan. The MoUs will promote closer cooperation for exchange of knowledge and experience in detection, resolution and prevention of security related incidents between India and respective country.

The  MoU between CERT-In and CyberSecurity, Malaysia for Cooperation in the area of cyber security was signed on November, 23, 2015 in Kuala Lumpur during the prime minister’s visit to Malaysia.

The MoU between CERT-In and Singapore Computer Emergency Response Team (SingCERTwas also signed in November.

The MoU between CERT-In and Japan Computer Emergency Response Team Coordination Center (JPCERT/CC) was signed in December, 2015.

17 reserve battalions by J&K and LWE states
The cabinet also took a decision to the raising of 17 India Reserve Battalions (IR Bns) by Jammu & Kashmir and Left Wing Extremism (LWE) affected states. It includes five in the state of J&K, four in Chhattisgarh, three in Jharkhand and Odisha and two in Maharashtra.

They will help in recruiting local youths. In this direction, the states will relax the age and educational criteria, if required. In J&K, 60% of the vacancies will be filled from the border districts. For LWE states, 75% of the vacancies of constables will be filled up from 27 core districts.

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