Delays Impact Nearly 60% Of HAM Projects; Costs Rise 5–10%: Crisil Ratings

New Delhi, May 11 (KNN) A significant portion of under-construction road projects under the Hybrid Annuity Model (HAM) are facing execution delays, though their credit risk profiles remain stable due to safeguards built into concession agreements, according to Crisil Ratings.

An analysis of 72 HAM projects covering around 2,600 km—about one-third of the under-construction portfolio awarded between 2021 and 2025.

Right-of-Way Issues Key Bottleneck

Manish Gupta, Senior Director and Deputy Chief Ratings Officer, Crisil Ratings, said, "Around 60 per cent of under-construction HAM road projects are delayed by over 11 months on average. Non-availability of right-of-way is the primary reason 75 per cent of these projects are delayed. Other reasons include delays in environmental and forest clearances, design approvals, clearances from local authorities as well as force majeure events such as heavy rains and protests.”

“About 90 per cent of the length experiencing delays has received extension approval from the authority as the reasons for delays are not attributable to the concessionaire, mitigating the impact on credit risk profiles," Gupta added.

The remaining 10 per cent of delayed project length, which has yet to receive extensions, is facing similar issues and may be exposed to higher risks if approvals are not granted in time.

Cost Overruns Offset by Contractual Safeguards

Anand Kulkarni, Director at Crisil Ratings, noted, "The delays expose the concessionaire to cost-overrun risks. As per our estimates, the delays have increased project costs by 5–10 per cent on average. Nevertheless, the concession agreement allows inflation indexation which helps in the recovery of some of the increased costs. Additionally, provisions such as de-scoping and de-linking of project length, where RoW has not been received, protect cash flows of the concessionaire.”

“These clauses have aided several projects in the past to receive provisional completion certificates at over 90 per cent physical progress and start receiving annuities," he stated.

Operational Projects Also Affected

Delays are not limited to under-construction assets. Among projects that became operational by March 2026, about 58 per cent experienced delays averaging 9.5 months. However, most of these projects also received extension approvals, containing credit risks.

Policy Response and Risk Outlook

To address recurring execution challenges, the government plans to award new projects only after ensuring availability of encumbrance-free land and key approvals.

In cases where delays stem from financial stress at the sponsor level, mechanisms such as ‘harmonious substitution'—which allows replacement of the developer in consultation with lenders—offer a pathway to revive stalled projects.

Outlook Stable, Execution Key

Overall, while execution delays remain a concern, the credit risk outlook for HAM road projects remains stable due to contractual protections. Timely completion within revised deadlines will be a key monitorable going forward.

(KNN Bureau)