Infrastructure major Larsen & Toubro Limited (L&T) has expressed its intention to sell its stake, exceeding 90 per cent, in the L&T Hyderabad Metro Rail project to either the state or central government through a new Special Purpose Vehicle (SPV), citing operational and accumulated losses.In a letter addressed to the Ministry of Housing and Urban Affairs (MoHUA), L&T Metro Rail stated that despite repeated follow-ups, the Telangana government has not provided the expected financial assistance. The delay is worsening the financial distress of the concessionaire, making the situation increasingly difficult to manage.“However, under these circumstances, we remain open to offer our equity stake in the existing metro network for purchase by the government of Telangana (GoTG) or the government of India (GoI) through the new SPV and take over Phase I and its operation and maintenance, together with Phase II-A and Phase II-B to attain the intended objective,” the letter read.The company cited several structural, financial and regulatory challenges that resulted in significant cost and time overruns due to delays beyond its control, such as property acquisition, right of way issues, changes in alignment and utility shifting.According to the latest annual report of L&T Metro Rail, revenue from operations and other income for the financial year 2024–25 was Rs 11.09 billion, compared to Rs 13.99 billion in the previous financial year, marking a decline of 21 per cent.The loss before and after tax stood at Rs 6.26 billion for the year under review, compared with Rs 5.55 billion in the prior year, registering an increase of 13 per cent.The company signed the concession agreement with the then Government of Andhra Pradesh (prior to the state’s bifurcation) in September 2010 and achieved financial closure for the project in March 2011. A consortium of 10 banks led by the State Bank of India sanctioned the entire debt requirement for the project.Owing to delays and cost overruns, the concessionaire submitted claims amounting to Rs 37.56 billion to the state government in March 2017, which escalated to Rs 50 billion by the time the metro was fully commissioned in February 2020.Even after commissioning, financial stress persisted, particularly due to the Covid-19 pandemic, which forced a complete shutdown of the metro for 169 days. The impact on ridership has continued due to changes in working culture, including remote working and altered travel patterns.L&T Metro Rail also expressed its inability to participate as a public-private partnership partner in the Chief Minister Revanth Reddy government’s ambitious expansion projects for the elevated rail corridor – Phase II-A and Phase II-B.Image Source:https://swarajyamag.com/