The Telangana government has decided to take over Hyderabad Metro Rail Phase-I from Larsen & Toubro at Rs 15,000 crore. The Telangana Cabinet, chaired by A. Revanth Reddy, approved the takeover of the 69-km Phase-I network of Hyderabad Metro Rail, with the transaction to be completed by March 31 this year.
The government is acquiring the Hyderabad Metro Phase-I primarily to meet a structural condition required for undertaking the next phase of Metro expansion and to remove ownership hurdles that currently block Phase-II.
According to the government, the Union government has made it clear that Phase-II can be taken up as a joint venture between the Centre and the state only if the entire Metro network is under a single entity. Since Phase I is currently operated by L&T under a public-private partnership, Telangana cannot proceed with Phase II in the joint venture mode unless it acquires the existing network.
Another factor behind the decision is L&T’s unwillingness to undertake Phase-II works. With the private concessionaire not interested in continuing with expansion, the state concluded that taking over Phase I was necessary to move ahead with future corridors.
The government expects to acquire Phase I at an approximate 22 per cent discount. The asset valuation is estimated to be between Rs 19,000 crore and Rs 22,000 crore. Telangana expects to pay around Rs 15,000 crore, including outstanding liabilities. Reportedly, the government will take over the debt of Rs 13,000 crore and pay the remaining Rs 2,000 crore to L&T.
Officials say the takeover will allow the state to seek approvals and funding for Phase II, which has been proposed in two parts. Phase-II A involves 76.4 km across five corridors, while Phase-II B proposes 86.1 km across three corridors. Currently, the Hyderabad Metro only serves limited parts of Hyderabad, and the city badly needs expansion to the new IT districts as well as to different suburbs. The government maintains that without bringing Phase I under its control, Phase II cannot be processed under the joint venture framework, making the purchase a prerequisite rather than a policy choice.
However, the details of the deal have not been made public yet. Urban policy experts like Donti Narsimha Reddy are demanding the basis for valuation and also questioning the Rs 800 crore loan the government gave to L&T in the past.
