HYDERABAD: With the Indian Railway Finance Corporation (IRFC) agreeing to extend a Rs 13,615 crore loan, the stage is set for the state government to take over the 69-km Hyderabad Metro Rail Phase-I project from L&T Metro Rail Hyderabad Limited (L&TMRHL). The formal transfer is expected by early next month.
The loan will refinance the outstanding debt of L&TMRHL as of April 30, 2026. It will carry a repayment period of 20 years and be backed by a Telangana government guarantee.
The state government has also approved an equity infusion of about Rs 1,385 crore into Hyderabad Metro Rail Limited (HMRL) through the Hyderabad Metropolitan Development Authority (HMDA).
The takeover is considered essential for moving ahead with the proposed Metro Phase-II expansion. The Centre had indicated that future expansion proposals should be handled by a single, government-controlled operating entity.
The state government has authorised HMRL and L&TMRHL to complete all agreements, legal formalities and documentation required for the transfer. It has also permitted the HMRL managing director to sign the share purchase agreement. The decisions were approved following a meeting of the Cabinet sub-committee on April 10, 2026.
Under the refinancing arrangement, L&TMRHL will continue servicing the debt through its revenues, in line with the agreed repayment schedule.
The government has also approved a debit mandate in favour of the Reserve Bank of India in connection with the state guarantee for the loan. The Principal Secretary (Finance) has been authorised to sign the guarantee, letter of undertaking and related documents with IRFC.
State to retain employees for 1 year
HMRL and L&TMRHL have further been permitted to enter into a tripartite facility agreement with IRFC for refinancing the debt. They will also open escrow accounts and execute escrow agreements with related parties, including L&T, IRFC and IDBI Bank.
To ensure continuity of operations, the government has approved a transition services agreement between HMRL, L&T and L&TMRHL during the handover period.
The state has also decided to retain the services of 115 L&TMRHL employees for one year at HMRL’s cost of
Rs 24.3 crore annually. In addition, seven CXO-level executives from L&T will provide advisory support on metro operations for six months at L&T’s cost.
Officials said the takeover aims to remove administrative hurdles and secure quicker approvals from the Union government for Metro Phase-II. L&T had reportedly declined to continue as an equity partner or sign operational integration agreements, citing financial issues.
The proposed Phase-II network will cover 162.5 km across eight corridors.
Phase-II (A), estimated at Rs 24,269 crore, includes five corridors: Nagole-Shamshabad RGIA (36.8 km), Raidurg-Kokapet Neopolis (11.6 km), MGBS-Chandrayangutta (7.5 km), Miyapur-Patancheru (13.4 km), and LB Nagar-Hayathnagar (7.1 km).
Phase-II (B), estimated at Rs 19,579 crore, includes three corridors: RGIA-Future City (39.6 km), JBS-Medchal (24.5 km), and JBS-Shamirpet (22 km).