Hyderabad: Telangana has begun the complex process of taking over the 69-km Hyderabad Metro Rail network from Larsen & Toubro, a ₹15,000 crore transaction that will mark one of the largest acquisitions ever undertaken by a state govt. The state govt will formally assume control of phase I of the metro from April, but officials say the transition will depend on three critical areas: Financial restructuring, transfer of assets and liabilities, and ensuring uninterrupted operations and maintenance. The state cabinet on Monday approved the purchase of a 100% equity stake in the phase I project from L&T. The project is valued at ₹15,000 crore, including debt of ₹13,000 crore and about ₹2,000 crore payable towards L&T’s equity. IDBI Capital Markets & Securities has been appointed transaction adviser to conduct financial and legal due diligence, while Delhi Metro Rail Corporation subsidiary, Delhi Metro International Limited, will undertake technical due diligence and assess the system’s operational health.“The state govt is in discussions with the Indian Railway Finance Corporation, which is a navaratna company and a subsidiary of Indian Railways. It is ready to give Rs 13,000 crore, which will be partly in Japanese yen and partly in rupees. The interest per annum will be much less than the present loans (about 8%), and the loan repayment period is about 20 years,” HMR managing director Sarfaraz Ahmad told TOI on Tuesday.He further said, “The debt is proposed to be serviced from the revenue generated from the fare box and non-fare box. A share purchase agreement covering all aspects of the transaction will be entered into between L&T and the Telangana govt soon.”Panel constitutedTo steer the acquisition, the govt has constituted a committee of senior secretaries along with a cabinet sub-committee on resource mobilisation, which has already submitted its report. A key issue after the takeover will be the future of govt land allotted to L&T under the concession agreement. Of the 269 acres transferred, about 149 acres were used for the metro network and depots. Of the remaining 120 acres, around 71 acres were not monetised, while nearly 49 acres were developed as transit-oriented projects, including malls. Once the transfer of assets and liabilities is completed, all land — developed and undeveloped — will revert to the state govt. Officials said valuations of these parcels and associated real estate assets will be undertaken before deciding their future use. Ensuring seamless services for commuters is another major priority. Phase I operations are currently handled by Keolis, a France-based transport operator that has managed the system since commercial operations began in 2017. After the takeover, the state is expected to retain Keolis for operations and maintenance.Contract on till NovSources said the original five-year contract ended in Nov 2022 and has since been extended — first by three years until Nov 2025 and then by one more year until Nov this year. “The state govt is likely to continue the services of Keolis for operations and maintenance for one more year beyond Nov in view of its experience in automation and communication-based train control. The operations achieved 90% passenger satisfaction and 99.5% punctuality,” HMR officials said. Officials indicated that maintaining service continuity while restructuring finances and assets will be crucial to successfully closing the takeover of one of India’s largest metro rail public-private partnership projects.
