The BJP-led Centre has finally offered an olive branch to A. Revanth Reddy, the Chief Minister of Telangana, who has been demanding the release of a ₹13,527-crore loan granted by the Indian Railway Finance Corporation.
On Tuesday, the CM met Union Urban Affairs Minister Manohar Lal Khattar in New Delhi to secure final clearance for the loan.
During an amicable discussion, although no final decision was reached, the leaders agreed on the way forward. They have decided to appoint SBICAPS as the consultant to conduct a comprehensive study on the valuation of Hyderabad Metro Phase-I, the funds required for its acquisition, the selection of lending institutions, the Phase-II expansion project, the estimated construction cost, and the financing required for the expansion. Future action will be taken based on the consultant's report.
The meeting also decided that, for coordination during the consultant's study, one officer from the Central government and the special secretary of the state municipal administration and urban development department will serve as nodal representatives. These two officials will work together to ensure the process moves forward expeditiously.
Before talking to Khattar, the Telangana CM had a discussion with the railway minister, Ashwini Vaishnaw, and G. Kishen Reddy, the union coal minister, on June 22. Reportedly, the railway minister has assured the CM that the issues will be resolved, and the Centre was in favour of completing Hyderabad Metro’s expansion.
Until this meeting, Telangana CM was on a warpath with the Centre and had particularly targeted Kishen Reddy, alleging that he had stopped the disbursement of the IRFC loan. On his part, Kishen Reddy said that the dispute was the Centre’s suggestion that IRFC should have “first charge” right on the Hyderabad Metro income. The state officials argued that further micromanagement by IRFC over the state government’s entity was uncalled for, since the state had given absolute and unconditional repayment guarantees for the IRFC loan, which is expected to be repaid over 20 years.
The Telangana government did not agree to incorporate this interpretation and demanded that the Centre refrain from creating hurdles to loan amount disbursement. The IRFC, Hyderabad Metro Rail Limited and L&T Metro Rail (Hyderabad) Limited signed the loan agreement on May 25 in New Delhi. The Centre is coming up with a new clause, which is overtly "bureaucratic and redundant", irking the state government. The question was – how could the Telangana government escape its debt servicing obligations after signing a loan agreement with a central public sector enterprise?
While leaving for Delhi on June 21, a troubled Revanth Reddy announced that the state would go solo on the Metro expansion if the Centre refused to clear the disbursal. He explained that the current, costly debt is creating a daily burden of Rs 2.5 crore and about Rs 1,000 per year. Despite initial refusal, the Centre has finally agreed to find a middle ground on this matter. With today’s friendly approach and the Constitution of a mechanism, the state government officials are now confident that the Metro project expansion will go ahead, albeit with minor delays.
