The Telangana government has proposed two solutions to L&T to resolve issues over integrating Hyderabad Metro Phase-2 with the existing network, following L&T’s objections.

The state has valued L&T’s Phase-1 equity at Rs 150 billion and offered two options: either put its stake up for sale in the open market, with the government ready to match the highest private bid, or transfer its Rs 130 billion loan to the state, which would pay the remaining Rs 2,000 crore. The proposal was forwarded to the Centre, which requested an MoU with L&T for network integration. L&T, citing ‘unreasonable issues,’ initially resisted and even threatened to exit operations, demanding the government take over Phase-1 for Rs 200 billion—a demand rejected by the Chief Minister.

L&T holds equity in Phase-1, covering 69 km across three corridors, and is a key operator. The state plans to expand Metro under Phase-2 as a joint venture with the Union government at a cost of Rs 240 billion, covering five corridors spanning 76.4 km. The expansion is expected to triple daily ridership from five lakh to 15 lakh, helping offset L&T’s current annual losses of Rs 6 billion.

Officials noted that prior delays in soft loan disbursements and underutilisation of allocated commercial land contributed to Phase-1 losses. The state now plans to raise Phase-2 loans with a sovereign guarantee at 4 per cent interest, reducing operational costs and increasing projected Metro revenues.

News source: The New Indian Express