What is HAM, BOT? India’S First Sewage Treatment Plant Under Hybrid Annuity (HAM) (Important) (Download PDF)

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Tripartite agreement was signed between National Mission for Clean Ganga (NMCG) and the state level executing agencies Uttarakhand Pey Jal Nigam and Uttar Pradesh Jal Nigam for setting up of India’s first Sewage Treatment Plants under Hybrid Annuity mode, at Haridwar and Varanasi.

Image of Hybrid Annuity Model

Image of Hybrid Annuity Model

Image of Hybrid Annuity Model

Details of Urban Sewage Discharged into Ganga

  • About 3000 MLD sewage from 97 cities on its banks are the biggest source of pollution for Ganga.

  • Of this, 1750 MLD sewage comes from just 10 cities.

Progress So Far in Ganga Cleaning

  • 34 projects worth Rs. 3581 crore had been sanctioned for Ganga cleaning between 2008 - 2014 of which 56 projects are approved since 2014 and 18 are ready

  • Committee headed by MoS Dr. Satya Pal Singh is monitoring the projects on a monthly basis.

  • Water Resources Ministry is exploring innovative ways for utilization of recycled sewage by power plants, sugar industries, distilleries, tanneries, and for extracting bio-CNG, methane, and carbon dioxide.

What is Hybrid Annuity Mode?

  • Hybrid Annuity mode (HAM) based STPs for Haridwar and Varanasi is the first PPP mode project in sewerage sector.

  • Under the agreement, the maintenance of the project is the responsibility of the concessionaire for which there will be performance based phased payment.

  • This ensures continued performance of the sewage infrastructure assets created due to better accountability, ownership and optimal performance.

  • Apart from Varanasi and Haridwar second set of sewage treatment projects under HAM include STPs at Naini, Jhusi, and Phaphamau at Allahabad (72 MLD), STPs at Unnao, Shuklaganj, and Bithoor along with Kanpur (21.4 MLD), STPs at Digha and Kankarbagh in Bihar (150), STPs at Kolkata and Howrah (141 MLD) STPs at Farukhabad (30 MLD), STP at Bhagalpur (65 MLD).

  • NMCG has appointed strategic consultants for PPP design and transaction advisory support for integration of sewage treatment infrastructure in Kanpur, Allahabad, Patna, and Kolkata.

  • Interactive website on National Mission for clean Ganga (NMCG) invites the corporates to undertake CSR activities for Ganga Rejuvenation

What Are Different Models for PPP Partership (HAM, BOT)?

  • Hybrid Annuity Model (HAM) was first introduced to revive PPP (Public Private Partnership) in highway construction.

  • Three different models –PPP Annuity, PPP Toll and EPC (Engineering, Procurement and Construction) were followed by the government for PPP.

  • HAM is a mix between the existing models – BOT Annuity and EPC.

The Build Operate and Transfer (BOT) Annuity Model

  • A developer builds the highway, operates it for a specified duration, and transfers it back to the government.

  • The government starts payment to the developer after the launch of commercial operation of the project.

  • Payment is made on a six month basis.

BOT Toll Model

  • A road developer constructs the road and allowed to recover his investment through toll collection over usually a period of nearly 30 years.

  • No government payment to the developer.

Engineering, Procurement and Construction (EPC) Model

  • Cost is completely borne by the government.

  • Government invites bids for engineering knowledge from the private players.

  • Procurement of raw material and construction costs are met by the government.

  • Private sector’s participation is minimum and limited to engineering expertise.

  • Difficulty of the model is in high financial burden for the government

What is Hybrid Annuity?

  • Hybrid annuity is payment made in fixed amount for a considerable period and then in a variable amount in the remaining period.

The Hybrid Annuity Model (HAM)

  • HAM is a mix of BOT Annuity and EPC models.

  • First 40 % payment is made as fixed amount in five equal installments whereas the remaining 60 % is paid as variable annuity amount after the completion of the project depending upon the value of assets created.

  • Government contributes 40 % of the project cost in the first five years through annual payments (annuity). Developer must raise the remaining 60 % in the form of equity or loans.

  • Remaining payment is made based on assets created and the performance of the developer.

  • There is no toll right for the developer. Under HAM, revenue collection is responsibility of the National Highways Authority of India (NHAI).

Advantages of HAM

  • Gives enough liquidity to the developer and the financial risk is shared by the government.

  • Private partners bear the construction and maintenance risks as in the case of BOT (toll) model they only partly bear the financing risk.

  • Government’s plans to use HAM for al stalled projects where other models are not applicable.

Image of risk Sharing In BOT Mode

Image of Risk Sharing In BOT Mode

Image of risk Sharing In BOT Mode

Details of STP in Varanasi and Haridwar

The 50 MLD STP in Varanasi and 82 MLD (68MLD in Jagjeetpur & 14MLD in Sarai) STP at Haridwar would ensure that untreated sewage does not flow into river Ganga under the Namami Gange program.

- Published/Last Modified on: December 9, 2017

Policy/Governance

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