Is Telangana Taking Over Phase I of Hyderabad Metro from L&T?
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Synopsis
The Telangana government's decision to take control of Phase I of the Hyderabad Metro marks a pivotal shift in the project's management. With L&T divesting its stake, the state aims to expedite further developments in public transport and secure the future of the metro network.
Key Takeaways
- Telangana government will assume control of Phase I of Hyderabad Metro.
- Complete debt of Rs 13,000 crore will be taken over by the state.
- One-time payment of Rs 2,000 crore will be made to L&T.
- Phase II proposals aim for a total of 163km of metro expansion.
- Operational integration between phases is a key concern.
Hyderabad, Sep 25 (NationPress) The Telangana government is set to assume control of Phase I of the Hyderabad Metro as L&T has opted to divest its entire stake in this significant infrastructure project.
The state has tentatively agreed to take over the Phase-I Metro Rail project, which involves assuming a debt amounting to approximately Rs 13,000 crore.
Additionally, the state will compensate L&T with around Rs 2,000 crore as a one-time settlement for their equity investment in L&T Metro Rail Hyderabad Limited (LTMRHL).
This decision was reached during a meeting between Chief Minister A. Revanth Reddy and L&T Group CMD S.N. Subrahmanyan.
Subrahmanyam recommended that the government absorb the entire debt of LTMRHL and also pay about Rs 5,900 crore for its equity value.
Moreover, he highlighted that according to the Supplementary Concession Agreement signed on July 22, 2022, the state has yet to pay Rs. 2,100 crore of the agreed Rs 3,000 crore as an interest-free loan.
The state government expressed that this takeover is aimed at hastening the approval process for the proposed Phase II by the Central government.
Terms of the takeover will be determined through mutual discussions, ensuring all legal and statutory requirements are met, according to a statement from Hyderabad Metro Rail Limited (HMRL).
In order to address the increasing demand for public transport in Hyderabad and nearby areas, the state has submitted proposals to the Centre for the sanctioning of 8 lines as part of Phase IIA & IIB, covering a total of about 163km of additional metro network.
The primary concern raised by the Centre is that Phase II is being implemented by a government agency, while Phase I was established by a private entity. They insisted on a definitive agreement with L&T for the operational integration of Phase I and the proposed Phase II to move forward with the proposal.
The Centre also requested L&T Metro to join the Phase II project as a joint venture with both the Centre and the Telangana government. However, L&T expressed regret, stating that they would neither participate in Phase II A and Phase IIB as an equity partner nor sign the definitive agreement, and offered to transfer their equity stake in LTMRHL to either the state or Central government.
To resolve the deadlock that has persisted since November 2024, Chief Minister Revanth Reddy held discussions with L&T Group CMD Subrahmanyan and senior L&T officials.
The Chief Minister expressed a desire for L&T to participate in the Phase II expansion as an equity partner. However, Subrahmanyan reiterated that L&T cannot engage in Phase II as an equity partner due to their exit from owning and operating transportation concession assets.
The Chief Minister urged L&T to sign a 'definitive agreement' to integrate the operations of Phase I and Phase II corridors, including revenue and cost-sharing mechanisms, as required by the Centre to advance the Phase II proposal.
Subrahmanyan replied that L&T cannot sign the definitive agreement due to significant concerns regarding seamless train operations between the two phases and the revenue and cost-sharing frameworks.
As an alternative, to allow the Centre to further process the proposal, he reiterated L&T's offer to divest their entire stake in Phase I metro to the state government, thus converting Phase I into a state-owned entity. Consequently, discussions regarding financials, asset valuation, and other aspects of the Phase-I project were conducted.
Point of View
The Telangana government's takeover of Phase I of the Hyderabad Metro represents a strategic move to enhance public transport infrastructure. This decision aligns with broader goals of improving urban mobility and providing efficient transportation solutions. By assuming control, the state aims to address regional demands while navigating complex partnership dynamics with L&T.
NationPress
25/09/2025
Frequently Asked Questions
Why is the Telangana government taking over Phase I of Hyderabad Metro?
The Telangana government is taking over Phase I to expedite the approval of the proposed Phase II and to manage public transport more effectively.
What financial obligations does the Telangana government have towards L&T?
The state will take over a debt of approximately Rs 13,000 crore and pay L&T about Rs 2,000 crore as a one-time settlement.
What is the significance of the proposed Phase II?
Phase II is crucial for expanding the metro network and improving public transport in Hyderabad, addressing growing demand in the region.
What concerns did the Centre raise regarding the project?
The Centre expressed concerns about the operational integration between Phase I and Phase II since they involve different management entities.
Will L&T participate in Phase II as an equity partner?
L&T has indicated that they will not participate in Phase II as an equity partner, opting instead to divest their stake.
