L&T pushes Metro exit to Dec 31 as T hunts for Rs 13,600 cr loan | Hyderabad News
Hyderabad: Telangana’s plans to take over the Hyderabad Metro Rail phase I from L&T have hit another hurdle, with delays in securing a ₹13,600 crore loan forcing Larsen & Toubro (L&T) to once again extend the deadline for divesting its stake in the project. The latest extension pushes the transaction deadline to Dec 31, raising uncertainty over the timeline for the state’s takeover of the metro asset.L&T has informed the Bombay Stock Exchange (BSE) that it has extended the completion deadline for the sale of its stake in L&T Metro Rail (Hyderabad) Ltd (LTMRHL) to Dec 31. Under an agreement with state-owned Hyderabad Metro Rail Ltd (HMRL), L&T will divest its entire stake in LTMRHL for ₹1,461.47 crore, while the Telangana govt will take over the project’s outstanding debt.The transaction was initially expected to be completed by June 30. L&T later revised the target date to Sept 30, before now extending it again to the end of Dec.Municipal administration department officials said the state government is now close to finalising a funding arrangement with a consortium of commercial banks to finance the takeover. Sources said discussions have advanced, and an agreement could be concluded around the Dasara festival.The delay comes after earlier efforts to secure funding through the Indian Railway Finance Corporation (IRFC) failed to materialise. Despite an initial assurance and the signing of an MoU, the IRFC subsequently backed out of the proposal to extend the ₹13,600 crore loan.The state govt later sought a financial evaluation of metro rail phases I and II through SBI Caps, but that exercise also failed to yield the desired outcome.Following this, chief minister A Revanth Reddy directed officials to explore alternative funding avenues, leading the govt to approach several commercial banks.Official sources said the govt was initially reluctant to opt for commercial borrowing because of higher interest rates. The IRFC had reportedly offered financing at around 4% interest and in Japanese Yen, making it a far more attractive option.“L&T also took loans from the consortium of commercial banks earlier,” a senior Hyderabad Metro Rail official said.The govt had also explored funding support from the Japan International Cooperation Agency (JICA), but the agency was unwilling to finance the takeover of an existing project. JICA typically extends assistance for new infrastructure projects rather than refinancing completed ones.Once the financial transaction is completed, HMRL will have to enter into a fresh agreement with the agency currently operating the metro rail system. The existing concession agreement with L&T is scheduled to end in Nov 2026, adding urgency to the govt‘s efforts to complete the takeover process.
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