Roadblocks Ahead: HAM Projects Face Execution Delays but Remain Financially Stable

Under-construction road projects under the hybrid annuity model are delayed, yet their credit profiles remain stable supported by concession agreement protections. Despite delays due to unforeseeable factors and cost overruns, Crisil Ratings states that inflation indexation will help mitigate financial impacts on concessionaires. Nearly 60% of HAM projects face delays.

Under-construction road projects under India's hybrid annuity model are facing execution delays, yet remain financially stable, Crisil Ratings reported on Thursday. Despite trailing schedules, credit profiles are supported by protections in concession agreements.

The hybrid annuity model allows the government to pay private construction entities a set annuity until the concession period ends. Though many projects have extended timelines due to factors beyond the concessionaire's control, inflation indexation under the agreements helps limit financial repercussions.

An analysis of 72 projects covering 2,600 km found that roughly 60% are delayed, with costs increasing by 5–10%. Factors include non-availability of right-of-way, environmental clearances, and other force majeure events. Yet, financial risks remain mitigated, according to Crisil Ratings.