HYDERABAD: In the wake of L&T objecting to integrating Hyderabad Metro Phase-2 with the existing network, the state government is working to resolve the issue. Sources said the government has valued L&T’s Phase-1 equity at Rs 15,000 crore and offered two options: put its stake for sale in the open market, with the state ready to take over by matching the highest private bid, or transfer its Rs 13,000 crore loan to the state, which would pay the remaining Rs 2,000 crore.
After the proposal was sent to the Centre, the state was asked to sign an MoU with L&T for integrating the network. Sources said L&T was reluctant, citing ‘unreasonable issues’ and even threatened to exit operations, demanding that the government take over Phase-1 for Rs 20,000 crore, citing its Rs 7,000 crore investment and Rs 13,000 crore loans, a demand the CM rejected outright.
‘Expansions will help curb losses’
L&T holds equity in Hyderabad Metro Phase-1, which covers 69 km across three corridors and is a key stakeholder and operator of the project. The state government decided to expand the Metro under Phase-2 as a joint venture with the Union government at a cost of Rs 24,000 crore. The expansion is proposed to cover five corridors spanning 76.4 km.
L&T claims losses of Rs 7,000 crore in Phase-1, amounting to about Rs 600 crore annually. Currently, around five lakh people travel by Metro daily. The Phase-2 expansion is expected to increase ridership to 15 lakh. Sources said this would directly benefit L&T, as higher passenger numbers would help offset annual losses. “If ridership triples, the present losses of Rs 600 crore a year can be eliminated. Without expansion, losses will only mount,” they said.
The major reasons for the company’s losses, officials noted, were the previous BRS government’s failure to release the promised soft loan of Rs 3,000 crore during the Covid-19-induced lockdown — only Rs 900 crore was given — and L&T’s reported inability to effectively utilise and develop the 200 acres of land allocated for commercial use.
Top sources said the state now plans to raise a loan for Phase-2 with a sovereign guarantee from the Union government at 4% interest. “This will reduce running costs. Post-expansion, Metro revenues are expected to touch Rs 10 crore a day. After repayment and operating expenses, a daily profit of Rs 2 crore is projected,” they said.