This shift moves away from older public-private models like Design-Build-Finance-Operate-Transfer (DBFOT), which struggled to attract private investors who were hesitant to absorb long-term traffic fluctuations and unpredictable revenue streams on new rail routes.
Under this updated mechanism, the government covers 40 percent of total project expenses in staggered payments tied to specific construction milestones. The private developer secures the remaining 60 percent through a mix of equity and debt financing.
After construction is completed, the government takes over passenger and freight traffic revenue risks, paying the private operator fixed annuity disbursements along with inflation-indexed returns throughout the operational period. By taking demand uncertainty off the table for private companies, authorities hope to kickstart private capital deployment, speed up construction timelines, and strengthen national freight and passenger transit networks.