Indian Railways Drops Revenue-Risk Model for 6 Rail Projects Worth ₹31,814 Crore, Approves HAM

The Ministry of Railways has changed the proposed structure for six new rail-line projects, moving them from a risk-sharing model to the Hybrid Annuity Model (HAM), as per a Business Standard news report. The change followed feedback from potential market participants on the earlier structure. 

The Public Private Partnership Appraisal Committee (PPPAC), headed by Economic Affairs Secretary Anuradha Thakur, approved the revised proposal on 1 August 2026. The 6 projects have a combined capital cost of ₹31,814 crore. 

Projects Across Three States 

Four of the projects are in Odisha, while Telangana and Jharkhand have one project each. The projects include Balaram-Putgadia-Tentuloi, Budhapank-Tentuloi-Luburi, Jajpur-Keonjhar Road-Aradi-Dhamra Port and Tikiri Station-Waltair Bauxite Mines. 

The Manuguru-Ramagundam line is in Telangana, while Pakur/Nagarnabi-Godda is in Jharkhand. The total bid project cost for the 6 projects is ₹15,975 crore. 

DBFOT Proposal Reworked 

PPPAC had given in-principle approval for the projects in April under the Design Build Finance Operate Transfer (DBFOT) model. The ministry later reviewed the structure after receiving market feedback. 

Under HAM, Railways will take the traffic and tariff risks. It will also provide 40% of the Bid Project Cost as a grant during the construction period. 

Revenue to Remain with Railways 

Passenger and freight earnings from the projects will go to the Railways. Private concessionaires will receive annuity payments, price-indexed operations and maintenance (O&M) payments and limited non-fare revenue. 

Railways will be responsible for land acquisition, statutory approvals, and the 40% construction payment. The concessionaire will handle the design, financing, and construction of the projects. 

Operations and Maintenance 

After construction, Railways will operate the trains and provide rolling stock and crew. The concessionaire will maintain the project assets and stations and replace assets when required, except rails. 

The ministry has also proposed allowing financially strong investors without technical expertise to participate through arrangements with qualified EPC contractors. Bid documents will set the conditions for such arrangements. 

Read More: RBI to Introduce Digital Payment Intelligence Platform to Combat Banking Fraud! 

Conclusion 

The 6 projects will now be taken forward under HAM instead of the earlier DBFOT structure. The arrangement leaves traffic and tariff risks with Railways while private firms undertake construction and asset maintenance. 

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