Builders Association urges CM to drop HAM plan on Telangana, cites viability concerns

The Builders Association of India has urged the Telangana government to drop plans to implement the Hybrid Annuity Model (HAM) for road development. Citing poor toll recovery feasibility and socio-economic risks, the group proposed an alternate constituency-wise road maintenance model.

Hyderabad: The Builders Association of India (BAI), Telangana chapter, has urged the State government to reconsider its plan to implement the Hybrid Annuity Model (HAM) for road development, citing concerns over toll recovery viability and its impact on the livelihoods of contractors and workers.

The association stated that, instead of undertaking new road widening projects, it would be more beneficial to renew existing roads. This approach would not only reduce government expenditure but also improve road infrastructure and ensure better access for motorists, the association said in a letter addressed to Chief Minister A Revanth Reddy.

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As an alternative, the BAI suggested treating each Assembly constituency as a separate unit, where tenders could be floated to entrust road maintenance to contractors for a period of seven years. This model, according to the association, would ensure better quality in road works. The BAI argued that under the existing regular contract model, the government could execute these works at less than 40 per cent of the expenditure proposed under the HAM scheme.

The State government is currently planning to implement the HAM scheme, which includes the construction and maintenance of 5,190 km of Roads & Buildings (R&B) roads and 7,947 km of Panchayat Raj and Rural Development (PRRD) roads. The estimated cost under the scheme is Rs.16,414 crore for R&B roads and Rs.16,780 crore for PRRD roads.

As per the HAM model, the government will pay 40 per cent of the project cost within two and a half years, while contractors must bear the remaining 60 per cent. After a defect liability period of 2.5 years, the government will repay the contractors’ share in instalments spread over 15 years.

Opposing these plans, the BAI Telangana chapter said the recovery of the 60 per cent contractor investment through toll collection was not feasible in the State. The HAM model was neither practical nor economically viable, it said.

The association also referred to the Pradhan Mantri Gram Sadak Yojana (PMGSY), which incorporates both construction and a five-year maintenance period within the same contract. This model, the BAI pointed out, has proven to be both sustainable and successful over the long term.

Highlighting the socio-economic impact, the association said more than 120 batch mix plants had been established across Telangana, with each plant directly employing 50 to 100 workers and providing indirect employment to over 200 people. Each plant represents an investment of around Rs.8 crore to Rs.10 crore, it added.

Given the scale of this investment and the employment generated, ensuring livelihood security for those involved in the road construction ecosystem is of critical importance, the association stressed.