Now Reading: Hyderabad Metro Phase-I takeover, Phase-II expansion hit funding hurdle
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Hyderabad Metro Phase-I takeover, Phase-II expansion hit funding hurdle
Hyderabad Metro Phase-I takeover, Phase-II expansion hit funding hurdle
Nearly a year after the Telangana government signed an agreement with Larsen & Toubro (L&T) to take over Hyderabad Metro Rail Phase I, the buyout process and the proposed Phase II expansion…
Nearly a year after the Telangana government signed an agreement with Larsen & Toubro (L&T) to take over Hyderabad Metro Rail Phase I, the buyout process and the proposed Phase II expansion have stalled over funding issues. The initial proposal involved paying Rs 2,100 crore for L&T's equity and assuming around Rs 13,000 crore in debt, later revised after due diligence.
SBI Caps, tasked with securing a lender for about Rs 13,500 crore, has been unable to finalise a deal despite approaching several agencies, including institutions in Gujarat's GIFT City. No lender has shown willingness to offer the low-interest rates the government seeks, officials said. The Indian Railway Finance Corporation withdrew from a proposed Rs 13,527-crore loan days after signing an agreement earlier this year.
The Centre is reportedly unwilling to sign a joint venture agreement for the Rs 38,595-crore Phase II until Phase I is under a single operating entity. Meanwhile, L&TMRH, operating the metro since November 2017, is expected to receive another three-month extension. Nearly five lakh daily passengers face a longer wait for improved connectivity.
Indian Opinion Analysis
PPP metro buyouts in India are rare, and this case tests whether states can refinance operational debt without central guarantees. The Telangana government's insistence on low-interest loans clashes with lenders' risk appetite, especially without a sovereign backstop. Phase II's planned 122.9-km network, linking key suburbs and the airport, cannot proceed until the Centre signs a joint venture, which it has tied to a single operating entity. The key number to watch is whether SBI Caps can secure a loan before L&TMRH's next operating extension expires, likely in three months.
Source: thehindu.com
This brief was synthesised by AI from the source linked above.
