Railways mulling annuity model to boost investment

Model similar to HAM is also expected to speed up infra development

- DHRUVAKSH SAHA

In a bid to boost investment in the railway sector, the Ministry of Railways is considering the possibility of adopting a model similar to the Hybrid Annuity Model (HAM) and bidding out projects on a concession basis under it, according to people in the know of the matter.

“Initial discussions have begun in this regard, and there’s an effort to identify what projects can be bid out in this mode along with development of a potential pipeline of projects,” a senior government official said.

HAM is a popular investment and infrastructure-creation model, especially in the highways sector, and refers to a system where the authority (National Highways Authority of India, or NHAI, in the case of highways) pays 40 per cent of the project cost upfront. The remaining 60 per cent is paid in instalments or annuities, and the highway concessions are treated as transferable assets during the period of maintenance.