Road Projects Delayed, But Credit Risks Stable

Many under-construction road projects operating under the hybrid annuity model (HAM) are significantly behind schedule. Despite these execution delays, the creditworthiness of these projects remains robust, primarily due to protective clauses embedded in their concession agreements. The government's HAM scheme involves phased payments to private constructors throughout the concession period.

Rating agency Crisil's analysis of 72 HAM projects revealed that approximately 60% are delayed by an average of over 11 months. These delays have led to an estimated 5-10% increase in project costs. The primary reason, cited in 75% of cases, is the non-availability of right-of-way. Other contributing factors include delays in environmental and forest clearances, design approvals, and issues arising from force majeure events like adverse weather or protests.