Hyderabad: The Congress govt’s project to develop 5824-km roads at an estimated cost of 11,399 crore under the hybrid annuity model (HAM) is set to take off after initial hiccups, with the state govt adopting a dedicated debt mechanism (DDM) to address contractors’ concerns over payment delays.Tenders were called in Nov 2025 for development of HAM roads, but the last date was extended thrice as contractors sought payment guarantees. Officials now expect contractors to come forward following the introduction of DDM, under which Reserve Bank of India (RBI) would make payments towards bills pending to contractors if the state govt fails to pay within the specified time, and will then recover the amount by deducting it from loans and funds received by the state govt.
An official said the govt issued a GO on Jan 22, to provide assurance regarding bill payments to contractors, who undertake road construction under the HAM system. The official said the GO provides for a three-tier payment system, including an RBI guarantee, and is expected to encourage more companies to participate in HAM road construction projects.Under the three-tier system, payments would first be made from the roads and buildings and the panchayat raj departments. If payments are not made by these departments, payment would be arranged from the Payment Security Fund (PSF) as the second tier. If payments are still not made, DDM will apply, enabling contractors to receive payments directly from RBI.As part of the mechanism, the state government would issue a SOP (standing operating procedure) to RBI regarding payments to contractors. The central bank will then deduct the amount from loans and funds received by the state govt and pay contractors directly. Officials said details of the system would be included in the HAM tenders.Chief secretary K. Ramakrishna Rao issued orders in this regard. The govt has also relaxed tender conditions, revising the requirement that contractors bidding for HAM roads must have a net worth of at least 20% of the estimated project cost to 15%.Phase-I of HAM roads includes 419 roads with an accumulated length of 5824.27-km and an estimated cost of 11,399.33 crore. Widening, strengthening and construction of roads under the phase of HAM would be taken up in the districts of Adilabad, Bhadradri Kothagudem, Hanumakonda, Jagtial, Jayashankar Bhupalapally, Karimnagar, Khammam, Mahabubnagar, Mancherial, Nalgonda, Nizamabad, Rural Circle Hyderabad, Sangareddy, Siddipet, Wanaparthy and Yadadri Bhuvanagiri.
