Poor contractor response delays Telangana STP tenders under HAM

Telangana has extended STP tender deadlines to November 2 after contractors raised concerns over payments under the Hybrid Annuity Model. The Rs 1,314-crore project covers 101 urban local bodies across three packages, with Central and State funding arrangements proposed.

Hyderabad: Even as road development works under the Hybrid Annuity Model (HAM) are yet to take off, the State government is seeking to adopt the same model for constructing Sewage Treatment Plants (STPs). However, the initiative has received a poor response from contractors, forcing the Public Health department to extend the tender deadlines.

Contractors have expressed apprehensions over the HAM payment mechanism, particularly the reimbursement of their share of the project cost. Due to the poor response, the department has extended the deadline for submission of bids twice.

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The initial deadline was July 27. After extending it to September 8 and subsequently to October 12, the department has now extended the deadline to November 2.

The department has planned STP construction in 101 Urban Local Bodies (ULBs) across the State under three packages, with a combined estimated cost of Rs.1,314 crore.

Under Package I, STPs are proposed in 44 ULBs across the Sangareddy, Rangareddy, Nizamabad and Mahabubnagar divisions at an estimated cost of Rs.580 crore. The works are scheduled to be completed in 24 months.

Package II covers 30 ULBs in the Adilabad, Karimnagar and Warangal divisions, with an estimated cost of Rs.430 crore. Package III proposes STPs in 27 ULBs across the Nalgonda and Khammam divisions at a cost of Rs.304 crore.

Under the Swachh Bharat Mission, the Central government will provide 50 per cent of the project cost for each package. The State government will meet the remaining share through the HAM framework.

A senior Public Health department official said contractors had raised concerns over the payment mechanism. Under the model, the State government repays its share of the project cost in annual instalments.

“There are a few apprehensions among the contractors over the payment of their bills. The State government repays its share of the project cost to the bidders in annual instalments. We are trying to clear all their doubts,” the official said.

What is HAM?

The Hybrid Annuity Model is a public-private partnership framework used for infrastructure projects, including roads and water and sewage treatment plants. Under the arrangement, the government pays 50 per cent of the project cost, while the contractor arranges the remaining amount.

The government reimburses the contractor’s share in annual instalments, along with interest and operation and maintenance charges, over a fixed concession period. Depending on the project, the repayment period may extend to 10, 15 or 20 years.