Hyderabad: The Telangana Legislative Assembly on Saturday, March 28, passed a resolution endorsing the state government’s decision to take over Phase-I of the Hyderabad Metro Rail Project from infra major L&T.
Chief Minister A Revanth Reddy, who moved the resolution, said Phase-I of the project is spread over 69 km, and the state government submitted proposals to the Centre to develop Phase-II A and Phase-II B of the project in 76.4 km and 86.1 km, respectively.
The state government has taken into consideration the technical, legal and administrative problems being encountered to take up Phase-II A and Phase-II B with the joint partnership of the Central and state governments when Phase-I is in private management, he said.
The state government has decided to take over Phase-I from L&T through the Hyderabad Metro Rail Ltd (HMRL) to address the issues raised by the Centre, he said.
The Chief Minister sought the endorsement of the House for the state government’s decision to take charge of Phase-I of the project.
The state government has drawn up plans to improve public transport in Hyderabad and to make the city get international recognition, he said, thanking the members for their unanimous support of the resolution.
Congress MLA Balu Naik, who was in the chair, announced the adoption of the resolution by the House.
Bharat Rashtra Samithi (BRS) MLA T Harish Rao, who spoke immediately on voting on Demands for Grants for 2026-27, said the views of BRS were not taken. The resolution was not unanimous, he said.
The Telangana government in 2025 agreed to take over Phase-I of the Hyderabad Metro Rail project from L&T Group by paying Rs 2,000 crore for the equity in the concessionaire L&T Metro Rail Hyderabad Ltd.
It was agreed that the state government would also take over the company’s debt of Rs 13,000 crore, official sources had said. L&T has about 90 per cent equity in the project.
The infra major had expressed its desire to offload its stake in the Metro Rail project, about 70 km to either the state or central government through a new Special Purpose vehicle (SPV), citing operational and accumulated losses.
Sridhar Babu on the process of Metro’s takeover from L&T
Before the resolution was passed, Legislative Affairs Minister D Sridhar Babu gave the background of the Hyderabad Metro’s operations since its inception in 2010, and conception in 2012.
He said the initial concession period for L&T was 35 years, which was extendable for another 25 years as of July 5, 2012.
However, after the Metro began its operation, the BRS government signed a supplemental concession agreement in July 2022, extending the concession period to 60 years, which meant it could be extended till July 2072.
“The then BRS government had also allowed an interest-free loan of Rs 3,000 crore to L&T. But then the state government failed to address the need for expanding the Metro as per the expanding contours of the city, which resulted in Hyderabad falling from 2nd position to 9th position in terms of Metro rankings in the country,” Sridhar Babu stated.
He said the five out of four corridors of Hyderabad Metro Phase 2 (A) proposed for Rs 24,269 crore were extensions of the existing metro network, and the proposals for 3 new corridors under Phase 2 (B) for Rs 19,579 crore were submitted to the Centre on November 4, 2024, by the state government.
These two phases, the state government wanted to complete as a joint venture between the state government and the Centre.
“After multiple meetings held to review the expansion proposals, the Union Ministry of Housing and Urban Affairs insisted on a definitive agreement with L&T for operational integration of Phase 1,” he said.
Sridhar Babu also noted that during the meetings held, L&T had conveyed its inability to go further with Phase 2 (A) and (B), because of its corporate policy of exiting all existing Public Private Partnerships (PPP) projects.
He said that was when L&T had proposed Rs 7,000 crore as compensation for equity, and Rs 13,000 crore for taking over its debt amounting to Rs 13,000 crore as a one-time settlement on the day of negotiation.
“On September 25, 2025, the CEO, MD and Chairman of L&T suggested the takeover by paying Rs 5,900 crore for their equity value and complete debt of LTHMRL. On October 16, 2025, a proposal was sent to the council of ministers to form a sub-committee to study the modalities of the takeover, with the chief secretary as its chairman, and to submit a report for resource mobilisation,” Sridhar Babu explained.
He also mentioned that the Centre had nominated Sushil Kumar, the Managing Director of Uttar Pradesh Metro Rail Corporation Limited (UPMRCL), as a member of the sub-committee.
He said that the IDBI Capital, the transactional advisor for legal and financial due diligence, had estimated the market value of LTHMRL’s assets to be anywhere between Rs 20,544 crore and Rs 22,102 crore.
The technical due diligence of the takeover was done by the Delhi Metro International Limited (DMIL). Both institutions submitted their due diligence report to the cabinet sub-committee.
“As per the Metro Rail Policy of 2017, the purchase of shares of L&T had to be done through share purchase agreements, duly invoking the indemnity from the parent company. As per the financing requirements, the Indian Railways Finance Corporation (IRFC) agreed to provide a loan for the takeover of LTHMRCL for 75 per cent in Japanese Yen, and the balance through a rupee term loan,” he said.
Sridhar Babu noted that it was on February 22, 2026, that the sub-committee’s report on the takeover was submitted to the council of ministers, which was approved, and the HMRL was approved as a state government entity by the cabinet on March 23, 2026.
“It was agreed upon that the takeover needs to be completed by paying not more than Rs 15,000 crore (equity and debt of L&T) by April 30, 2026,” Sridhar Babu added.
(With inputs from PTI)
