Hybrid Annuity Mode Current Affairs - 2019
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India’s first Sewage Treatment Plant (STP) under Hybrid Annuity Mode will come up in Haridwar (Uttarakhand) and Varanasi (Uttar Pradesh).
In this regard, a tripartite agreement was signed between National Mission for Clean Ganga (NMCG) and state level executing agencies Uttar Pradesh Jal Nigam and Uttarakhand Pey Jal Nigam and with concessionaires.
The agreement is major step forward in realizing dream of Nirmal Ganga as it is first time ever in India that Hybrid Annuity-based Public Private Partnership (PPP) mode is being applied in sewerage sector. Under this agreement maintenance of project will be responsibility of concessionaire. They will be paid based on performance in phased manner. This will ensure continued performance of sewage infrastructure assets created due to better ownership, accountability and optimal performance.
Hybrid Annuity Model
The Union Cabinet had approved to Hybrid Annuity-PPP model in January 2016 with 100% central sector funding. Under this model, development, operation and maintenance of STPs will be undertaken ba Special Purpose Vehicle (SPV) created by winning bidder at local level.
As per this model, 40% of capital cost quoted will be paid on completion of construction while remaining 60% cost will be paid over life of project as annuities along with operation and maintenance cost (O&M) expenses. In this model, Annuity and O&M payments are linked to performance of STP mainly to ensure continued performance of assets created due to better accountability, ownership and optimal performance.