Telangana Panchayat road works under HAM model may now begin after Sankranthi

Telangana's proposed Panchayat road projects under the Hybrid Annuity Model face delays as contractors and the government struggle to secure funding. The 2,162 works, divided into 17 packages, are expected to begin around Sankranthi once loans are sanctioned, officials say

Hyderabad: Commuters in several rural areas will have to continue navigating battered roads as the proposed Panchayat road works under the Hybrid Annuity Model (HAM) face further delays.

The delay is mainly due to contractors and the department struggling to mobilise funds for taking up the works. Telangana is the only State in the country to implement the HAM model for laying Panchayat roads.

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The Panchayat Raj and Rural Development (PRRD) department had invited tenders for 7,449.50 km of road works under HAM. A total of 2,162 road works were divided into 17 packages at an estimated cost of Rs.6,294.81 crore.

Like the Roads and Buildings (R&B) department, the PRRD department had floated tenders for taking up road works under HAM. Initially, the response was lukewarm, forcing officials to wait for contractors to submit their bids.

Generally, contractors are reluctant to take up projects involving shorter stretches of roads. Moreover, unlike R&B roads, Panchayat roads are scattered across the State. Contractors usually prefer projects covering longer stretches along a single route.

However, officials now claim that the 17 packages have received a good response.

Contractors are making arrangements at work sites and are also approaching banks to raise loans. The loans are expected to be sanctioned in the next couple of months, following which the works are likely to commence around Sankranthi, a senior official said.

“Once the contractors secure loans, the Appointed Day agreements will be signed. From the Appointed Day, contractors will have 18 months to complete the works,” the official explained.
The government, on behalf of the PRRD department, also needs to raise loans to meet its share of the project cost under the agreement.

Under HAM, the State government bears 40 per cent of the total contract value, while contractors bear the remaining 60 per cent. The government repays the contractors’ 60 per cent expenditure in instalments once every six months over 15 years under the maintenance clause

The government is making efforts to secure loans from the Housing and Urban Development Corporation Limited (HUDCO) for this purpose. The proposed borrowings also include funding for R&B department road works worth about Rs.9,000 crore under HAM.

However, negotiations are understood to be underway over the interest rates on these loans. The government is discussing the interest component with HUDCO. Once the rates are finalised, the road works are expected to gather momentum.