The Comptroller and Auditor General of India (CAG) has raised serious concerns over expenditures in Maharashtra’s highway and road development projects executed under the Hybrid Annuity Model (HAM). The latest CAG report revealed ₹297.97 crore of unwarranted expenditure in HAM projects. The report was tabled in the state legislature on Wednesday.
HAM Model: 60-40 Funding Flaws
The HAM model is a public-private partnership (PPP) framework, under which the government bears 60% of the project cost, while 40% is funded by private developers. The developers are repaid through fixed annuity payments post-construction.
The audit noted that the ‘crust thickness’ for flexible pavements was set higher than required, leading to crores in unnecessary expenditure. Several deficiencies were also found in Detailed Project Reports (DPRs), including lump-sum provisions for utility shifting without component-wise estimates and incorrect clauses in the RFP for DPR consultants.
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DPR Excesses: ₹217 Cr on 78 Reports
A total of 78 DPRs were prepared covering 195 works. The total expenditure on DPR preparation was ₹217.40 crore, which included ₹5.55 crore earmarked for land acquisition, which was not actually undertaken.
In three HAM packages, delays in milestone and annuity payments occurred, resulting in ₹4.65 crore interest liability to the developers. In some cases, completion costs were miscalculated, construction-stage payments were under-adjusted, and incorrect interest rates were applied.
O&M Insurance Overcharges Exposed
Operation and Maintenance (O&M) costs also incurred excessive insurance charges, leading to an additional ₹34.56 crore expenditure across 17 packages. Insurance charges were pegged at 0.15% of the estimated project cost, while concessionaires paid between ₹0.50 lakh and ₹9.07 lakh annually. Furthermore, a lump-sum provision of ₹10 lakh per year for patrolling was made irrespective of road length.
Three packages began work without forest clearances, leaving some projects incomplete. In three cases, roads could not be fully utilized due to narrow minor bridges, reconstruction of weak bridges, and incomplete bridge stretches.
Monitoring Lapses, No Independent Engineers
The CAG also highlighted serious monitoring lapses. There were deficiencies in inspections, absence of inspection targets, and delays in appointing independent engineers and safety consultants. No independent engineers were appointed during the O&M phase of any package.
However, the report noted improvements in connectivity in certain sections. The Ashta-Vinayak pilgrimage route (606 km) saw travel time reduce from two to three days to 13 hours 30 minutes following execution of select HAM packages.
CAG recommended that while preparing DPRs, authorities must ensure accurate cost estimation, realistic O&M expense assessment, timely financial allocation, and robust monitoring mechanisms. This would enable smooth compliance with concession agreements and prevent unnecessary expenditure.
Overall, the report concluded that HAM projects suffered from technical deficiencies, inflated cost estimates, and weak monitoring, resulting in crores of unwarranted expenditure. Yet, some packages demonstrated improved travel time and road connectivity, benefiting both the general public and pilgrims.
About the author – Rehan Khan is a law student and legal journalist with a keen interest in cybercrime, digital fraud, and emerging technology laws. He writes on the intersection of law, cybersecurity, and online safety, focusing on developments that impact individuals and institutions in India.
