NHAI’s Contract Models — EPC, BOT, HAM & TOT
At a glance
Model chooser (rule-of-thumb)
Concession ~30 yrs
O&M + Toll Rights] B -- No --> C{Traffic predictability} C -- High --> D[BOT (Toll): Private finances
Toll risk on concessionaire] C -- Medium --> E[HAM: Govt 40% during construction
60% recovered via annuities ~15 yrs] C -- Low/Strategic --> F[EPC: 100% public funded
Design & Build contract] D --> G[Transfer at concession end] E --> G F --> O&M[O&M by Authority]
HAM’s 40% construction support and 15-year annuities are specified in MoRTH/NHAI documentation; typical TOT concessions are ~30 years. See references at the end.
EPC — Engineering, Procurement & Construction
Government funds 100%; contractor designs & builds; no traffic or revenue risk. O&M lies with the Authority post-construction.
Standard EPC agreements are published by MoRTH and NHAI.
BOT — Build, Operate, Transfer
BOT (Toll): Private finances the project, builds and maintains; collects tolls and bears traffic risk.
BOT (Annuity): Private builds/maintains; receives fixed annuity payments from Authority; no traffic risk.
Model Concession Agreements (MCAs) detail risk allocation and revenue/annuity mechanics.
HAM — Hybrid Annuity Model
- Construction support: ~40% of bid project cost paid by Authority during construction (in linked tranches).
- Balance 60%: financed by concessionaire (debt + equity), recovered via semi-annual annuities over ~15 years.
- Traffic risk: borne by Authority; concessionaire bears construction & performance risk + O&M obligations.
Annuities are typically semi-annual for ~15 years, with O&M obligations defined in the HAM MCA.
TOT — Toll, Operate, Transfer
Monetisation of brownfield, operational highways. Investor pays an upfront concession fee to NHAI for the right to operate, maintain and collect tolls, usually for about 30 years. Government recycles proceeds into new projects.
NHAI has awarded multiple TOT bundles with 30-year concessions and significant upfront proceeds.
Risk & Cash-Flow Comparison (interactive)
Risk scale is illustrative (0=none, 10=high). Traffic risk is primarily on the private party only in BOT-Toll; HAM/TOT shift traffic variability largely to the Authority side.
Cash-flow shapes (stylised): EPC is outflow for Authority during build; BOT-Toll shows private outflow then toll inflows; HAM shows blended pattern; TOT shows large upfront inflow to Authority, then O&M/toll flows for concessionaire.
Key PPP/Finance Formulas
- Net Present Value (NPV): $$ \mathrm{NPV} = \sum_{t=0}^{T} \frac{CF_t}{(1+r)^t} $$ Used for bid evaluation & viability checks.
- Internal Rate of Return (IRR): $$ 0 = \sum_{t=0}^{T} \frac{CF_t}{(1+\mathrm{IRR})^t} $$
- Level Annuity Payment (HAM illustration): $$ A = P \cdot \frac{r}{1-(1+r)^{-n}} $$ where $P$ is recoverable principal (≈60% of BPC), $r$ discount/annuity rate, $n$ semi-annual periods.
- Shadow Bid Traffic Adjustment (BOT-Toll): Revenue sensitivity to traffic: $$ \Delta R \approx \epsilon_T \cdot \frac{\Delta T}{T}\cdot R $$ where $\epsilon_T$ captures elasticity incl. leakage/compliance.
Side-by-Side Summary
| Model | Who Funds? | Who Builds? | O&M | Revenue / Payment | Typical Use |
|---|---|---|---|---|---|
| EPC | Authority (100%) | Contractor | Authority | — | Strategic / low or uncertain traffic |
| BOT (Toll) | Private (Debt+Equity) | Concessionaire | Concessionaire | Toll revenue (traffic risk with private) | Predictable & robust traffic |
| BOT (Annuity) | Private (build) + Authority pays annuities | Concessionaire | Concessionaire | Fixed periodic annuities; no traffic risk | When govt prefers budgeted payouts |
| HAM | Authority ~40% during construction; rest via annuities | Concessionaire | Concessionaire | Semi-annual annuities (~15 yrs) + O&M | Balanced risk/return; moderate traffic |
| TOT | Investor pays upfront to Authority | — (Brownfield) | Concessionaire | Toll rights for ~30 yrs | Monetise completed assets, recycle funds |
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