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The Telangana government has agreed to acquire Phase-I of the Hyderabad Metro Rail project from L&T Metro Rail Hyderabad Ltd (LTMRHL) in a INR 15,000 crore deal. This includes assuming INR 13,000 crore of LTMRHL's debt and paying INR 2,000 crore for L&T's equity stake. L&T's decision to exit follows financial challenges and operational difficulties. The state aims to expedite approval for Phase-II by the Government of India through this acquisition.
The Telangana government has finalized an agreement to take over Phase-I of the Hyderabad Metro Rail project from L&T Metro Rail Hyderabad Ltd (LTMRHL) in a INR 15,000 crore deal. Under the terms of the agreement, the state will assume INR 13,000 crore of LTMRHL's debt and pay INR 2,000 crore to L&T for its equity stake in the project. This acquisition follows L&T's decision to exit the project due to financial challenges and operational difficulties. Advertisement
L&T had previously expressed its intent to offload its stake in the project, citing accumulated losses and delays in financial assistance from the Telangana government. The company had requested financial support, including a INR 3,000 crore soft loan, of which only INR 1,000 crore was granted. Additionally, L&T proposed monetizing assets like malls through long-term leases, with limited approvals granted. Despite these efforts, the company faced challenges in servicing the project's debt, particularly due to a high 10% interest rate on a INR 13,000 crore loan, making operational revenues inadequate.
The Telangana government aims to expedite the approval process for Phase-II of the metro project by the Government of India through this acquisition. Chief Minister A. Revanth Reddy, along with senior state officials, met with L&T Group Chairman and Managing Director S. N. Subrahmanyan to discuss the way forward. The meeting concluded with an agreement in principle for the state to take over Phase-I, including the associated debt and equity settlement.
The Hyderabad Metro Rail project, spanning approximately 70 kilometers, has been a significant infrastructure initiative for the city. The completion of Phase-I marked a major milestone in enhancing urban transportation. With the state's acquisition, the Telangana government aims to ensure the project's sustainability and progress, particularly in advancing the subsequent phases.
Source PTI
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