Model Concession Agreement for NHAI HAM: A Comprehensive Guide

The National Highways Authority of India (NHAI) introduced the Hybrid Annuity Model (HAM) in 2016 as a type of public-private partnership (PPP) contract to attract private investment and funding for the development of national highways. The Model Concession Agreement (MCA) is an essential document that outlines the terms and conditions of the HAM contract between NHAI and the private concessionaire.

In this article, we will delve into the key features of the Model Concession Agreement for NHAI HAM and its significance in PPP contracts.

Overview of NHAI HAM

The HAM model is a combination of two existing PPP models – build-operate-transfer (BOT) and engineering-procurement-construction (EPC). In this model, the NHAI engages private companies to construct, operate, and maintain national highways for a fixed period of up to 15 years after completion of the project. The private concessionaire contributes 60% of the project cost, and the remaining 40% is funded by the NHAI in the form of a partial annuity.

Features of the Model Concession Agreement

The MCA for NHAI HAM has several mandatory provisions that both the NHAI and the concessionaire must abide by during the project`s entire life cycle. Here are some essential features of the MCA:

1. Concession period – The MCA stipulates the concession period, which is the duration for which the concessionaire has the right to operate and maintain the project highway. The maximum concession period is 15 years from the commercial operation date (COD) of the project.

2. Performance security – The concessionaire is required to furnish various types of security, such as bid security, performance security, and mobilization advance guarantee, to ensure compliance with the terms of the MCA and timely execution of the project.

3. Project scope – The MCA defines the scope of the project and the standards for designing, constructing, and maintaining the highway as per the NHAI`s requirements.

4. Concessionaire responsibilities – The concessionaire is responsible for financing, designing, constructing, operating, and maintaining the project highway during the concession period.

5. Compensation arrangement – The MCA outlines the compensation structure, which includes the annuity payment to the concessionaire and the toll collection mechanism for the project highway.

6. Termination provisions – The MCA specifies the grounds for termination of the contract by either party and the consequences of such termination.

Significance of MCA in PPP contracts

The MCA is a crucial document in the NHAI HAM model as it defines the contractual obligations of both parties and lays down the conditions for effective project management. It provides a clear framework for the concessionaire to plan and execute the project and ensures that the project meets the NHAI`s standards and benchmarks.

Moreover, the MCA`s detailed provisions protect the interests of the NHAI as well as the concessionaire, making it a fair and equitable contract. By establishing a transparent mechanism for risk allocation and compensation, the MCA provides a conducive environment for private investment in national highways` development.

Conclusion

In conclusion, the Model Concession Agreement for NHAI HAM is a comprehensive document that defines the contractual obligations of both the NHAI and the private concessionaire. It provides a clear framework for project management and ensures that the project is completed as per the NHAI`s requirements. The MCA`s detailed provisions protect the interests of both parties and make it a fair and equitable contract. Overall, NHAI`s HAM model and MCA have been successful in attracting private investment in the development of India`s national highways.