HAM PROJECTS Vijay M.

Mistry Construction Pvt Ltd

HAM PROJECTS
oBid Parameter –Life Cycle Cost (Net Present Value of the quoted Bid Project Cost + NPV of
the O&M Cost for the entire Operations period) shall be the bid parameter.
oConstruction Support of 40% of Bid Project Cost by Authority.
oConcessionaire shall have to bear the balance of 60% of the project cost.
oSemi-annuity payments shall be made to the concessionaire on completion of the project for
the balance 60 % of the project cost. Along with the annuity payments, interest shall be paid
on reducing balance cost (Interest rate to be paid Bank rate +3.00%).
oProject Cost shall be inflation indexed, which is the weighted average of 70 % WPI and 30%
of CPI.
oConcessionaire shall be responsible for the maintenance of the project, for which O&M
payment would be paid extra as the amount quoted into two equal instalment which will be
inflation indexed.
oToll collection would be in the Authority scope.

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HAM PROJECTS
For example a project cost of Rs1,000 Crores
Construction support of Rs 400 crores.
Balance project cost required to be funded by the concessionaire – Rs. 600 Crores
Through Debt and Equity requirement, remaining amount needs to be balanced.
a) Assuming 70:30 Debt: Equity Ratio
b) Equity required of Rs 180 Crores
c) Debt Required of Rs 420 Crores

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NAME OF THE WORK

Four Laning of Ujjain Garoth (Package – III), Suhagada to Bardiya Amra from Km 89+200
to Km 135.351 section of NH-148NG in the state of MP on Hybrid Annuity Mode.

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SALIENT FEATURES
Particulars
Signing of Agreement
Development Period
Appointed Date
Concession Period
Commercial Operation Date (COD)
Period of Completion
Operation Period
Description
Within 45 days of award of LOA
The period from the date of the Concession Agreement until the Appointed Date
The date on which Financial Close is achieved and every Condition Precedent
is satisfied, in accordance with the provisions of this Agreement, and such date
shall be the date of commencement of the Concession Period;
The period starting on and from Appointed Date and ending on the Transfer
Date. For avoidance of doubt it is clarified that the Concession Period shall
include the Construction Period plus a fixed period of 15 years of Operation &
Maintenance Period from the COD;
The commercial operation date of the Project shall be the date on which such
Completion Certificate or the Provisional Certificate is issued (the “COD”).
610th (six hundred) day from the Appointed Date shall be the scheduled date for
completion of the Project
The operation and maintenance period of 15 (fifteen) years commencing from
COD and ending on the Transfer Date;
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SALIENT FEATURES
Particulars Description
Special Purpose Vehicle, incorporated under the Indian Companies Act 2013 (the “SPV”), to execute the Concession
SPV
Agreement and implement the Project.
Prior to the Appointed Date, open and establish an Escrow Account with a Bank (the “Escrow Bank”) amongst the
Escrow Account
Concessionaire, the Authority, the Escrow Bank and the Senior Lenders through the Lenders’ Representative.
The Concessionaire hereby agrees and undertakes that it shall achieve Financial Close for an amount not lower than
either
1. Total Project Cost (60 % of Bid project Cost);
OR
1. 10% less than (Estimated Project Cost minus 40% of Bid Project Cost)
Within 150 (one hundred and fifty) days from the date of this Agreement.

Financial Close For Example,

Financial Closure (Assuming Bid project cost = Estimated Project Cost)
1) First Scenario (Sole Bidder)
 Approximately 346.932 Crores amount of balance needs to be arranged through combination of equity
and debt.
 Most HAM annuity road projects are SPVs, largely funded by 70-90% debt. Repayment of debt is
primarily through annuity receipts. (Source: CRISIL’s criteria for rating annuity road projects, January
2017)

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PAYMENT TERMS
Particulars
Payment during Construction period
Payment during Operation period
Bonus on early completion
Mobilization Advance
O&M Payments
Description
40% (forty per cent) of the Bid Project Cost , adjusted for the Price Index Multiple, shall be due and payable
to the Concessionaire in 10 (ten) equal instalments of 4% (four per cent) each during the Construction
Period
The remaining Bid Project Cost, adjusted for the Price Index Multiple, shall be due and payable in 30
(thirty)biannual instalments commencing from the 180th (one hundred and eightieth) day of COD
The Authority shall pay to the Concessionaire a bonus equal to 0.5% (Zero point five per cent) of 60 %
(Sixty per cent) of the Bid Project Cost for the first 30 (thirty) days by which COD shall precede the
Scheduled Completion Date
The Authority shall, on request of the Concessionaire, make an advance payment in a sum not exceeding
10% (ten per cent) of the Bid Project Cost against the BG in two equal instalments. First instalment at any
time after the Appointed Date and second instalment of the advance payment at any time, after 60(sixty)
days from the Appointed Date.
The Parties acknowledge and agree that all O&M Expenses shall be borne by the Concessionaire and in
lieu thereof; a lump sum financial support in the form of biannual payments shall be due and payable by the
Authority, which shall be computed on the “First Year O&M Cost”)£ + GST at the applicable rates, in
accordance with the provisions of this Clause 23.
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 PAYMENT TERMS DURING CONSTRUCTION PERIOD
Payment during Construction Period 40.00% Completion Cost Remark

1st Milestone (5% Physical Progress) 4% 5.00%

2nd Milestone (10 % Physical progress) 4% 5.00%
3rd Milestone (20% Physical Progress) 4% 10.00% Clause23.6.1

4th Milestone (30 % Physical Progress) 4% 10.00% The Parties acknowledge and agree that the
Authority has paid a portion of the
5th Milestone (40 % Physical Progress) 4% 10.00%
Completion Cost as payments during
6th Milestone (50 % Physical Progress) 4% 10.00% Construction Period pursuant to Clause 23.4
of this Agreement. The balance Completion
7th Milestone (60 % Physical Progress) 4% 10.00%
Cost remaining shall be due and payable
8th Milestone (70 % Physical Progress) 4% 10.00% during the Operation Period in accordance
with the provisions of Clause 23.6.2.
9th Milestone (80 % Physical progress) 4% 10.00%
10th Milestone (90 % Physical Progress) 4% 10.00%
(Preceding COD) 10.00%

Clause 23.6.2
The Completion Cost remaining to be paid in pursuance of the provisions of Clause 23.6.1 shall be due and payable in biannual installments
over a period of 15 (fifteen) years commencing from COD, (the “Annuity Payments”).

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PAYMENT TERMS FOR COMPLETION COST

Remark:

Each of the biannual installments payable hereunder shall be paid along with
interest on the reducing balance of Completion Cost at an interest rate equal to
the average of one year MCLR of top 5 Scheduled Commercial
Banks5 plus 1.25%. Such interest shall be due and payable biannually along with
each instalment

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O&M PAYMENTS
•The Parties acknowledge and agree that all O&M Expenses shall be borne by the
Concessionaire and in lieu thereof; a lump sum financial support in the form of biannual
payments shall be due and payable by the Authority, which shall be computed as (the
“First Year O&M Cost”) + GST at the applicable rates.
•The O&M Payments due and payable to the Concessionaire shall be paid in 2 (two) equal
biannual installments and disbursed by the Authority together with the corresponding
installments of Annuity Payments.
•Each installment of O&M Payment shall be the product of the amount determined and the
Price Index Multiple on the Reference Index Date preceding the due date of payment
thereof.
•First Year O&M Cost shall be the amount specified in the Bid of the selected Bidder.

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IMPORTANT CONSIDERATION
How to achieve the financial close?
What should be the proportion for Debt to Equity financing?
What would be the projected price indexed Multiple?
What would be the projected MCLR rate?
What would be the interest rate for debt financing?

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THANK YOU!