HAM road tenders draw poor response from bidders, officials worried

The State government's Hybrid Annuity Mode (HAM) road development plans faced poor bidder response, especially for maintenance works. Contractors prefer HAM for new roads and seek guarantees for loans and payments

Hyderabad: The State government’s plans to develop roads and maintain them under the Hybrid Annuity Mode (HAM) appear to have fallen flat, following a poor response from bidders for tenders floated by the Roads and Buildings (R&B) and Panchayat Raj and Rural Development (PRRD) departments.

The State government had planned to construct roads and highways under HAM to improve connectivity between rural and urban areas. Accordingly, both R&B and PRRD were entrusted with the task of floating tenders and executing the works.

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Under the HAM programme, construction works are to be completed within 30 months and maintained for a period of 15 years by the successful bidder.

The R&B department identified a 12,000 km road network to be developed under HAM. In the first phase, tenders were floated for works covering 5,824.27 km in different packages.

However, much to the dismay of the department, the response from bidders has been poor. This has left officials worried.

“Basically, HAM will be feasible for laying new roads and maintaining them. It is not feasible for maintaining existing roads and recarpeting them, as contractors do not have many options to make profits. Of the nearly 5,800 km for which tenders were floated, about 4,000 km have been categorised under maintenance,” a senior official said.

In addition, banks and financial institutions prefer to extend loans for capital works, but not for maintenance works, the official explained.

The government now has to take a call on whether to re-float the tenders and explore other options. Similar to the R&B department, the PRRD department also floated tenders for road works covering nearly 5,000 km, of which a majority were categorised as maintenance works.

A senior PRRD official said that during the pre-bid meeting, a few contractors raised queries and sought certain relaxations. Considering their representations, the last date for filing bids was extended by a few days. However, the response has remained poor so far, the official said.

Contractors have been opposing the HAM programme since the conception stage, citing various reasons.

During a meeting with R&B Minister Komatireddy Venkat Reddy, PRRD Minister D Anasuya and Deputy Chief Minister Mallu Bhatti Vikramarka in August last year, contractors had specifically insisted that the HAM programme should be restricted to new road development works. They sought continuation of repairs and maintenance works under the conventional system.

They also demanded that the State guarantee loans raised for HAM projects and ensure timely instalment payments to banks, so that contractors are not penalised for delays.