Hyderabad: The Telangana government and the Larsen & Toubro (L&T) Group have come to an agreement in principle for the state to buy L&T’s share in the Hyderabad Metro Rail project. This clears the way for the long-awaited Phase 2 expansion.
The decision comes after protracted talks about the metro’s plans to grow. On Thursday, Chief Minister Revanth Reddy called a high-level meeting with L&T Chairman and MD SN Subrahmanyan to settle important issues over ownership and operational integration.
In 2014, Hyderabad’s metro system was the second best in the country. Now, it is the ninth best. The planned Phase 2 expansion will include eight new lines and 163 kilometers of track to address the growing need for public transportation in the city.
The state wanted L&T to stay on as an equity partner, but the corporation has changed its business model and no longer invests in owning or running transit concessions. The main topic of conversation was the Definitive Agreement, which the Center needs to make sure that operations in Phase 1 and Phase 2 go smoothly together.
L&T suggested selling its whole Phase 1 stake to the Telangana government to break the deadlock. This would make the metro a totally state-run business. The deal in principle says that the state will take on the project’s debt of approximately Rs 13,000 crore and pay L&T a one-time settlement of about Rs 2,000 crore for its equity. The government will also pay out Rs 2,100 crore that is still owed under a supplementary concession arrangement from 2022.
This step is likely to speed up the Centre’s approval of Phase 2, which will make sure that the metro runs well and speed up the development of public transportation in Hyderabad.