Telangana to Develop Roads Using Ham Model

Hyderabad: The state government is exploring the Hybrid Annuity Model (HAM) to enhance road infrastructure, marking the first significant private investment initiative in this sector. Official sources reveal plans to upgrade state highways, roads and buildings (R&B) department-maintained roads, and rural roads overseen by the panchayat raj (PR) department under this model. In the initial phase, 17,000 km of rural roads will be developed at an estimated cost of Rs 28,000 crore.

The HAM model, a blend of the Build, Operate, Transfer (BOT) and Engineering, Procurement, and Construction (EPC) frameworks, was introduced in India in 2016 for national highway projects.

Under HAM, the government funds 40 per cent of the project cost, while private developers cover the remaining 60 per cent, typically through a mix of equity and debt. However, the state government is reportedly not in favour of allowing private developers to collect toll charges to recover their investments, citing political implications and potential public resistance. Instead, the government will reimburse developers over a decade, during which they will also manage and maintain the roads.

The R&B department manages 24,245 km of roads, including 3,152 km of state highways, while the Panchayat Raj department oversees a vast rural road network spanning 68,539 km. Nearly half of these rural roads are unpaved, prompting the need for urgent upgrades to withstand heavier traffic loads of up to 30 metric tonnes.

Official sources said the rural roads project, scheduled to be carried out between 2024 and 2028, will be implemented in stages, with a target of 5,000 kilometres in 2024-25, another 4,000 kilometers in 2025-26, another 5,000 kilometers in 2026-27 and 3,300 kilometers in 2027-28.

The move comes in response to severe damage caused by recent floods from July to September. Official sources said that the upgraded roads will not only support heavier vehicles but also ensure year-round resilience.

Beyond infrastructure repair, the project aims to boost rural economies by improving access to markets, enhancing connectivity, and reducing travel times. The initiative aligns with the state’s goal of achieving comprehensive rural connectivity by 2028.

The state Cabinet meeting chaired by Chief Minister A. Revanth Reddy at Secretariat on October 26 approved a comprehensive Rs 28,000 crore initiative to construct new roads and repair existing ones across villages, municipalities, and state highways over the next four years.

The project will be executed in a phased manner with private investments, with particular emphasis on connecting rural areas to district and state hubs through double and four-lane roads. The Chief Minister constituted a cabinet sub-committee to prepare a DPR for finalising which PPP model should be adopted for development of roads in Telangana.

The Cabinet sub-committee reportedly recommended adopting the HAM model and submitted a report to the Chief Minister. The report is expected to be discussed and approved in the next cabinet meeting by this month-end. If approved, tenders will be floated, contracts awarded, and work commenced by February 2025.