Govt takes over L&T Metro Rail

In a major decision, the Telangana government announced on Thursday that it would take over Hyderabad Metro Rail Phase 1 from infrastructure major L&T Group. Chief Minister A Revanth Reddy took the important decision of taking control of the metro rail services at a meeting held with the company representatives here.

In the crucial meeting, L&T Group Chairman and Managing Director S N Subrahmanyam informed the Chief Minister that as per the supplementary concession agreement signed in July 2022, the state government was yet to pay Rs 2,100 crore to L&T out of the agreed Rs 3,000 crore as interest-free loan. After detailed negotiations, with an objective to expedite the Phase 2 approval by the Union government, it was agreed in principle that the state government would take over the Phase-I Metro Rail project and the debt of the project which stood at about Rs 13,000 crore.

Further, the state government will pay about 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 conditions of the deal shall be worked out with mutual discussions and the process will be carried forward in a carefully calibrated and mutually agreeable manner, duly ensuring all legal and statutory compliances,” an official release said.

Earlier, L&T conveyed to the government that it would neither be able to participate in Phase 2A and Phase 2B as equity partner nor sign the definitive agreement and expressed their willingness to offer their equity stake in LTMRHL to state or Central government. “We are unable to sign the definitive agreement as there are major concerns regarding seamless train operations between the two phases and regarding revenue and cost sharing mechanisms. As an alternative solution, and in order for Government of India to process the proposal further, he reiterated the offer to divest their complete stake in Phase 1 metro to the state government, that will make the Phase 1 as a state government entity,” the L&T CMD was quoted as saying by the official release.

“Hyderabad, which stood second in the country in 2014 in terms of the network length of metro rail, has now slipped to the 9th position in the country. To meet the growing demand for public transport in Hyderabad and surrounding areas, the Telangana government has submitted proposals for sanction of eight new metro lines as part of Phase 2A & 2B expansion, covering about 163 km of additional network,” the release said.

The government of India has held multiple meetings to review these proposals. One of the key issues raised by the Union government was the need for operational integration between the existing Phase 1 metro, developed under a private concession, and the proposed Phase 2 expansion under a government agency. It was also suggested that L&T Metro could consider participation in Phase 2 as a joint venture partner with GoI and GoTG, it added.

However, L&T refused to participate in the Phase 2 expansion, leading to its exit from the L&T Metro Rail Phase 1 project.