Future of Hyderabad Metro hangs in balance amid funding row

The Telangana government's takeover of Hyderabad Metro remains incomplete as the release of a Rs 13,600-crore IRFC refinancing loan has been delayed. Chief Minister Revanth Reddy alleges political interference, while L&T will continue operating the metro until the transition is finalised

Hyderabad: Despite the Telangana government taking over Hyderabad Metro Phase-I from L&T Metro Rail, at least on paper, its future hangs in the balance as the release of a Rs 13,600-crore refinancing loan has been delayed, with the issue now taking a political turn. Amid the blame game between the State and the Centre, L&T Metro Rail Hyderabad will continue operating the metro services until all formalities related to the takeover are completed.

On April 29, the Hyderabad Metro Rail Limited (HMRL) signed a Share Purchase Agreement with L&T Metro Rail Hyderabad to acquire 100 per cent equity shares for an equity value of Rs 1,461.47 crore. Subsequently, from May 1, the Telangana government assumed full control of the Hyderabad Metro and appointed a new board to oversee operations under State ownership.

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While the takeover has been completed on paper, the financial transaction is yet to be concluded. As part of the deal, the Telangana government also agreed to take over L&T’s debt of around Rs 13,000 crore. To facilitate the process, the State secured refinancing support of up to Rs 13,600 crore from the Indian Railway Finance Corporation (IRFC). An agreement to this effect was signed in New Delhi on May 25. The refinancing package carries a 20-year tenure with quarterly repayments.

However, in a significant development, Chief Minister A Revanth Reddy on Monday alleged that IRFC had withheld the release of the Rs 13,600-crore loan despite approvals being in place. According to him, the funds were scheduled to be released by June 15 but were delayed due to political reasons. The Chief Minister accused Union Minister G Kishan Reddy of creating hurdles and influencing the Union government to hold back the release of funds.

With the delay continuing, it remains unclear when IRFC will release the amount and enable the State government to complete the takeover process. If the stalemate persists, the Telangana government may have to approach another financial institution for refinancing support. However, such a move could be cumbersome and may increase the financial burden on the State.

The Chief Minister claimed that IRFC had approved the refinancing package at an interest rate of 4 per cent. Securing a similar loan from another institution at the same rate could prove difficult, potentially increasing the government’s repayment obligations. “We have to work out alternate options,” the Chief Minister said.

Amid these uncertainties, the future of the Hyderabad Metro remains in limbo. Until the Telangana government formally assumes L&T’s debt of Rs 13,000 crore, the company will continue operating the metro services, according to a senior HMRL official. Commenting on the consequences of a prolonged delay in fund release, the official said, “L&T will continue operations until the takeover process is fully completed.”