Centre asks Telangana to raise ₹13,600 crore for Metro
HYDERABAD: The Centre has put the responsibility of raising funds required for the takeover of Hyderabad Metro Rail Phase I back on the Telangana government, even as there has been little progress on the proposed takeover and Phase II expansion nearly six weeks after discussions between the two governments.
The state will have to explore options to raise around ₹13,600 crore required for the Phase I takeover, according to sources.
SBI CAPS yet to make headway on Metro plan
Chief minister A Revanth Reddy held discussions with Union ministers in June over funding for the takeover of Metro Phase I and expansion of Phase II. The two sides decided to appoint SBI Capital Markets (SBI CAPS) as consultant to assess funding requirements and explore loan options for the two phases.
SBI CAPS, however, is yet to make progress on the exercise, sources said. It was expected to identify financial institutions that could fund the two phases and facilitate the loan process. It was asked to submit its report within two months.
Nearly six weeks have passed without substantial progress, sources said.
The Telangana government has appointed municipal administration special chief secretary Jayesh Ranjan as its representative for discussions on the Metro issue. The Centre is yet to name its representative, while the SBI CAPS representative has also not been finalised, according to sources.
The state government decided to expand the Metro network after Larsen & Toubro (L&T), which developed Phase I, informed the government that the project had not generated the expected returns and was incurring losses.
The government concluded that taking over Phase I was technically necessary before proceeding with the Phase II expansion. The takeover required around ₹13,600 crore.
The state had completed the process for securing a low-interest loan from the Indian Railway Finance Corporation (IRFC).
Revanth Reddy subsequently discussed the sanction of the loan for the Phase I takeover and the Phase II expansion with Union ministers in June. The Centre suggested that instead of raising separate loans for the two phases, funding requirements for both should be considered together.
As a result, the ₹13,600 crore loan arranged by the state for Phase I was put on hold.
SBI CAPS was then tasked with assessing the combined cost of the two phases, identifying possible lenders and taking the financing process forward. It was also expected to facilitate selection of financial institutions and loan sanction.
Telangana explores fresh loan options for takeover
Following the June discussions, the Centre has not extended the level of support expected by the state on the Hyderabad Metro issue, sources said.
The Centre has now indicated that Telangana should arrange the funds required for the Phase I takeover, prompting the state government to explore fresh options for raising ₹13,600 crore, sources added.
IRFC had earlier offered financing at around 4% interest. The state is now looking for lenders that can offer funds at a similar rate.
The government is likely to approach State Bank of India, ICICI Bank and some other banks as part of the exercise, sources said.
Had the Centre issued the required no-objection certificate for the IRFC loan, the state government could have completed the Phase I takeover in May, according to sources.
The takeover has continued to face delays after the funding process stalled at the final stage.
