Funding delays stall Hyderabad Metro takeover and expansion
The Telangana government has yet to secure financing for its planned acquisition of Hyderabad Metro Rail Phase I from Larsen & Toubro, delaying a proposed 122.9-kilometre expansion. The government is seeking a lender for about ₹13,500 crore, while the existing operator may receive another extension.
The proposed government takeover of Hyderabad Metro Rail Phase I and the expansion of the network have slowed as Telangana continues searching for financing. Nearly a year after the State signed an agreement with Larsen & Toubro, officials have reported little visible progress on the buyout. The 69.2-kilometre Phase I system, built under a public-private partnership across three corridors, was to be transferred to the government through a one-time settlement.
The original proposal included ₹2,100 crore for L&T’s equity investment and the assumption of about ₹13,000 crore in project debt. After due diligence by IDBI Capital and DMRC International, the figures were revised. In April, the government announced a share purchase agreement to acquire 100% of L&T Metro Rail Hyderabad at an equity value of ₹1,461.47 crore, with ₹13,538.53 crore of debt proposed for refinancing.
SBI Caps was asked to find a financial institution willing to lend about ₹13,500 crore. According to officials cited in the source material, it has approached several agencies but has not finalised a deal because lenders have been reluctant to offer the low interest rates sought by the government. The Indian Railway Finance Corporation had earlier withdrawn from a proposed ₹13,527-crore loan arrangement after signing an agreement with Telangana.
SBI Caps has since been consulting Hyderabad Metro Rail Limited and L&T Metro Rail Hyderabad. The funding problem also affects Phase II, a proposed 122.9-kilometre network estimated to cost ₹38,595 crore. The Centre is reportedly unwilling to sign a State-Centre joint venture agreement until Phase I is placed under one operating entity, a step that would help the project seek international financing with sovereign backing.
L&T Metro Rail Hyderabad, which has operated the network since November 2017, is expected to receive another three-month extension. The existing system carries nearly five lakh passengers a day.
This independently written report is based on information supplied by the named publisher. Vertrix News has not independently verified the source report.