Crisil Ratings report has revealed that over 90% of road projects under the Hybrid Annuity Model (HAM) in India, awarded by the Ministry of Road Transport and Highways (MoRTH), are progressing according to schedule. This highlights the successful execution of these infrastructure projects and the steady pace of development in the country’s road sector.
The report, released on December 18, 2024, states that more than 90% of the total project length under development is being constructed on time. These projects have benefitted from provisions such as 80% right-of-way (ROW) availability before the appointed date, de-scoping measures, and inflation and interest-rate hedging. This has helped mitigate risks and ensured smoother project timelines. Anand Kulkarni, Director of Crisil Ratings, noted that about 66% of under-construction road lengths are expected to be completed on or before the scheduled time, while 26% of projects are only slightly delayed or awaiting approval for timeline extensions. These delays are often caused by factors such as non-availability of ROW or external events like heavy rains or mining bans, rather than execution issues.
The report further stated that only 8% of the total project length is facing significant execution challenges. This reflects the overall effectiveness of the HAM model in maintaining project timelines and managing risks. Once completed, HAM projects typically showcase strong credit profiles due to their steady cash flows from a central counterparty, which ensures timely payments to concessionaires. Crisil’s analysis suggests that these projects boast solid debt coverage metrics, with an average debt service coverage ratio (DSCR) of 1.3-1.4 times, supporting their credit stability. Crisil also highlighted that, with the increasing popularity of the HAM model and recent changes in bidding norms, the number of bidders has more than doubled in the past four fiscal years. This growth further underscores the growing confidence in the model and its ability to attract investment for large-scale infrastructure projects across the country. The steady progress of HAM road projects signals a positive trajectory for India’s infrastructure development, supported by strong financial profiles and effective execution strategies.