World · India Bureau
India eases exit rules for stalled hybrid annuity highway projects
The government has introduced a revised model concession agreement that allows developers to exit troubled hybrid annuity model projects more easily. The updated framework also clarifies compensation mechanisms for delays caused by authorities.
LSN India ·
India's Ministry of Commerce and Industry has unveiled amendments to the model concession agreement (MCA) governing hybrid annuity model (HAM) highway projects, streamlining exit provisions for developers facing prolonged implementation challenges.
The revised MCA introduces provisions for harmonious substitution of project operators, enabling developers to transfer their roles in stuck projects to alternative entities without protracted negotiations. This mechanism addresses a persistent bottleneck in India's ambitious highway development programme, where numerous HAM projects have experienced delays and financial stress.
Under the updated framework, compensation timelines and responsibilities for delays attributable to government authorities have been clarified, reducing ambiguity that previously complicated dispute resolution. The changes are designed to balance investor protections with government interests while accelerating project completion rates.
The HAM model, introduced as a middle ground between engineering, procurement and construction contracts and full concessions, has attracted significant private sector participation in India's road infrastructure development. However, the model has faced criticism over project delays and disputes regarding cost apportionment between government bodies and private developers.
The revised MCA is expected to improve project viability for future HAM awards while providing relief mechanisms for existing troubled projects, potentially unlocking stalled investments in the road sector.