Telangana to take over Hyderabad Metro Phase 1 from L&T in ₹15,000-crore deal
It’s curtains for L&T Metro Rail Hyderabad (L&TMRH) and the Public-Private Partnership (PPP) model for Phase 1 of the Hyderabad Metro Rail (HMR), with the State government agreeing in principle to take over the project.
As part of the one-time settlement, the government will pay ₹2,100 crore to L&T towards its equity investment and also take over the project’s debt of approximately ₹13,000 crore, according to an official release on Thursday. The development follows discussions between Chief Minister A. Revanth Reddy and L&T Chairman & Managing Director S.N. Subrahmanyan, along with other senior officials, to resolve issues and pave the way for the second phase of the metro project, which is awaiting clearance from the Centre for a joint venture with the State government. The takeover process is to be carried out in a calibrated and mutually agreeable manner, ensuring all legal and statutory compliances. Initially, the Chief Minister had invited L&T to participate in the metro expansion second phase as an equity partner, but the proposal was declined.
Mr. Subrahmanyan also expressed inability to sign an integration pact between phase one and the proposed phase 2, citing concerns over seamless train operations, revenue sharing, and cost mechanisms. Instead, L&T offered to divest its entire stake in HMR Phase 1, effectively converting it into a state-owned entity. This led to detailed discussions on financials, asset valuation, and debt restructuring.
L&T requested the government to take over its ₹5,900 crore debt for the equity value and referred to the Supplementary Concession Agreement signed on July 22, 2022, under which the government still owes ₹2,100 crore out of a ₹3,000 crore interest-free loan. After extensive negotiations, both parties agreed to proceed with the settlement to expedite HMR Phase 2 approval by the Centre. The State government has submitted proposals for eight new metro lines under Phase 2A and 2B, totalling 163 km of additional network.
The Centre had earlier raised concerns about Phase 2 being executed by a government agency while Phase 1 remained a private entity. It insisted on a definitive agreement with L&T for operational integration before processing the proposal further. L&T, however, declined to participate in Phase 2A and 2B.
Chief Secretary K. Ramakrishna Rao, Advisor (Urban Transport) N.V.S. Reddy, Finance secretary Sandeep Kumar Sultania, MA&UD Secretary K Ilambarithi; HMR MD Sarfaraz Ahmad, Principle Secretary to CM V. Seshadri, Secretary to CM K. Manicka Raj, L&T CMD advisor D.K. Sen, L&TMRH MD & CEO K.V.B. Reddy, were present, added the press release.
