Hyderabad Metro takeover faces further delays
HYDERABAD: The Hyderabad Metro Rail Phase I takeover remains caught in a deadlock, with no clear way forward even as the interest burden on outstanding loans continues to rise.
The agreement with the Indian Railway Finance Corporation (IRFC), which was part of the Phase I takeover plan, has stalled. Meanwhile, SBI Capital Markets has not yet been formally assigned the task of carrying out a fresh financial evaluation, as proposed by the Centre.
The impasse has continued since the takeover agreement with Larsen & Toubro (L&T) was finalised on April 29. The delay has so far added an interest burden of about ₹ 150 crore towards loan repayments, and the amount is expected to rise further by September.
The state government also raised the Metro Rail issue prominently at a meeting with MPs on Monday. Hyderabad Metro Rail officials briefed them on the developments so far and said finding alternative sources of funding had also become a challenge.
Proposed joint SPV is yet to take shape
Following recent discussions with the Centre, a special purpose vehicle (SPV) with representation from both the Union and state governments was proposed. The two governments would have an equal role in loan repayment and project management.
However, the SPV is yet to be formed.
Chief Minister A Revanth Reddy wrote to the Centre seeking steps to assign SBI Capital Markets the task of preparing financial estimates and to set up the SPV. However, there has been no response from the Centre so far.
Officials said the government was exploring alternative options to arrange about ₹ 13,000 crore required to refinance L&T’s loans, but several hurdles remained.
The state has already borrowed substantial amounts under the Fiscal Responsibility and Budget Management (FRBM) framework, making direct borrowing difficult. An HMRL official said the state would also ask the Centre to consider relaxing FRBM norms.
September takeover target now appears increasingly difficult
Against this backdrop, the Phase I takeover process is likely to face further delays. Though the government had planned to complete the process by September, officials have expressed doubts over whether the deadline can be met.
Even if the Centre gives immediate approval and SBI Capital Markets is assigned the financial evaluation, the firm would need at least three months to submit its report.
Lending institutions would then have to be selected based on the report, which could take additional time. As a result, the Hyderabad Metro Rail Phase I takeover is likely to be delayed further.
