
Telangana Government agreed to take over the 1st phase of Metro Rail project
Hyderabad: Telangana Government agreed to take over the 1st phase of Metro Rail project by assuming its outstanding debt of about Rs 13,000 crore. In addition, the government will pay around Rs 2,000 crore to L&T towards its equity investment in L&T Metro Rail (Hyderabad) Limited (LTMRHL) as a one-time settlement.
Chief Minister A Revanth Reddy, along with senior Government officials, held a meeting with L&T Group Chairman and Managing Director SN Subrahmanyan on Thursday and the senior executives of the company to discuss the way forward.
To expedite Union government approval for Hyderabad Metro Rail Phase-2, the State Government has, in principle agreed to take over the Phase-1 project by assuming its outstanding debt of about Rs 13,000 crore. In addition, the Government will pay around Rs 2,000 crore to L&T towards its equity investment in L&T Metro Rail (Hyderabad) Limited (LTMRHL) as a one-time settlement.
The takeover terms will be finalized through mutual discussions, ensuring compliance with all legal and statutory requirements. Either put its stake for sale in the open market, with the Government ready to match the highest private bid, or transfer the Rs 13,000 crore loan to the Government, which would then pay the remaining Rs 2,000 crore.
To meet the growing demand for public transport in Hyderabad and its surroundings, the State Government has submitted proposals for eight new lines under Phase 2A and 2B, totalling about 163 km. Hyderabad Metro Rail, which ranked second in the country in terms of Metro network length in 2014 has now slipped to ninth place.
The Union government has conducted several reviews of the proposals, but raised concerns since Phase-1 is operated by a private entity while Phase-2 is proposed to be executed by a Government agency. It has insisted on a definitive agreement with L&T for operational integration of the two phases before processing the proposal further.
The Centre also requested L&T to participate in Phase-2 as an equity partner alongside the Union and State Governments. However, L&T expressed regret that it would neither participate in Phase-2 nor sign a definitive agreement. Instead, the company conveyed its willingness to divest its equity stake in LTMRHL to either the State or Union Government.
During the meeting, the Revanth Reddy urged L&T to reconsider and participate in Phase-2 as an equity partner. CMD Subrahmanyan reiterated that L&T had exited the ownership and operation of transportation concession assets and could not participate. He also cited concerns over seamless operations, as well as revenue and cost-sharing mechanisms, as reasons for not signing the definitive agreement.
As an alternative, Subrahmanyan suggested that the State Ggovernment take over the complete debt of LTMRHL and pay about Rs 5,900 crore towards the company’s equity value. He also pointed out that under the supplementary Concession Agreement Signed on July 22, 2022, the state Government still owed Rs 2,100 crore out of the agreed Rs 3,000 crore as an interest-free loan.
After detailed discussions, it was agreed in principle that to expedite Phase-2 approval, the State Government would assume the Rs 13,000 crore debt of Phase-1 and pay Rs 2,000 crore to L&T towards its equity in LTMRHL as a one-time settlement.
Chief Secretary K Ramakrishna Rao, Advisor to Government (Urban Transport) NVS Reddy, Principal Secretary (Finance) Sandeep Kumar Sultania, MAUD Secretary, K Ilambarithi, HMRL Managing Director, Sarfaraz Ahmad, Principal Secretary to CM V Seshadri and Secretary to CM K Manicka Raj. Representing L&T were DK Sen, Advisor to CMD; KVB Reddy, MD & CEO of LTMRHL; and other senior executives attended the meeting.