HYDERABAD: Resetting the process for the takeover of Hyderabad Metro Rail Phase-I and the proposed Metro Phase-II expansion, the state and Union governments have decided to appoint SBI Capital Markets Ltd (SBICAPS) as a consultant to undertake a fresh assessment of both projects.
The decision was taken during a meeting between Chief Minister A Revanth Reddy and Union Housing and Urban Affairs Minister Manohar Lal Khattar in New Delhi on Tuesday. Union Railway Minister Ashwini Vaishnaw and Union Coal and Mines Minister G Kishan Reddy were also present.
Sources said the appointment of SBICAPS will render infructuous the earlier valuation exercise carried out by IDBI Capital and the proposed refinancing arrangement with Indian Railway Finance Corporation (IRFC), which formed the basis of the state government’s plan to take over Metro Phase-I from L&T.
The development assumes significance as the earlier process was undertaken with the knowledge and participation of Union government representatives. A committee of secretaries headed by the chief secretary had been constituted to examine the takeover of Metro Phase-I. Uttar Pradesh Metro Rail MD Sushil Kumar served on the committee as a representative of the Union government.
Based on the valuation conducted by IDBI Capital, the state government had proposed acquiring Metro Phase-I for about `15,000 crore. Of this, around `13,600 crore was to be raised through refinancing of loans availed by L&T, while the remaining amount was to be paid directly. The government had also entered into an agreement with IRFC for the refinancing component.
However, despite the agreement, the loan amount was not disbursed. The chief minister had earlier alleged that the funds were being withheld by the Centre. Official sources said certain issues in the loan agreement and differences of opinion among officials involved in the process contributed to the delay in disbursement.
Against this backdrop, the Union ministers are understood to have favoured a fresh valuation exercise before any further decision is taken on the takeover proposal.
Centre, state agree to appoint SBICAPS as takeover consultant
During Tuesday’s meeting, Revanth apprised the Union ministers of the hurdles facing the takeover of Metro Phase-I and the implementation of Metro Phase-II. Following discussions, both sides agreed to appoint SBICAPS as consultant.
The consultant will examine the valuation of Metro Phase-I, assess funding requirements for the proposed takeover, identify lending agencies and study refinancing options. It will also undertake a detailed assessment of the Metro Phase-II expansion, including project costs and financing mechanisms.
The state and Union governments will take a final decision on the future course of action after the consultant submits its report.
To facilitate the process, the chief minister and Union ministers agreed to nominate senior officials from both governments for coordination. A senior Union government official and the Special Chief Secretary, Municipal Administration and Urban Development department, will oversee the study and expedite related procedures.
In a statement, the Chief Minister’s Office (CMO) said the discussions on the takeover of Metro Phase-I and the implementation of Metro Phase-II had been productive.
Meanwhile, Kishan posted on X: “Chief Minister A Revanth Reddy wrote to me twice requesting for a meeting with Union Minister of Railways Ashwini Vaishnaw. Over the last two days, I facilitated meetings for the Chief Minister in New Delhi. The meeting with Union Minister of Railways Ashwini Vaishnaw on June 22 and the joint meeting with Union Minister of Housing and Urban Affairs Manohar Lal Khattar and Ashwini Vaishnaw on Tuesday took place in a conducive atmosphere. As a representative of Telangana in the Union Cabinet, I will always strive for the development of Telangana and the welfare of the people of the state (sic)”.
ALL ABOARD THE VALUATION EXPRESS
Sources said the consultant will assess the valuation of Metro Phase-I, funding requirements for its proposed takeover, potential lenders and refinancing options. It will also evaluate the cost and financing model for Metro Phase-II expansion. The state and Union governments will take a final decision after the consultant submits its report. Senior officials from both governments will coordinate the exercise, with a Union government official and the Special Chief Secretary, MAUD, overseeing the study and expediting the process.