Infra major Larsen and Toubro Limited (L&T) has expressed its desire to offload its stake, over 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 last month also said the Telangana government, despite repeated follow-ups, has not provided the expected financial assistance, and the delay is further aggravating the financial duress of the concessionaire and making the situation necessarily difficult to manage.
However, under these circumstances. We remain open to offer our equity stake in the existing metro network for purchase by the GoTG (government of Telangana) / Gol ( Government of India) through the new SPV and take over the Phase-l and its O&M together with Phase ll-A and Phase ll-B to attain the intended objective,” the letter said.
The firm said it faced several structural, financial and regulatory challenges resulting in substantial cost and time overrun due to delays on account of various reasons beyond the control of concessionaire viz property acquisition, right of way, changes in alignment, utility shifting, etc.
According to the latest annual report of L&T Metro Rail, the revenue from operations and other income for the financial year 2024-25 was Rs 1,108.54 crore as against Rs 1,399.31 crore for the previous financial year, registering a decrease of 21 per cent.
The loss before and after tax was Rs 625.88 crore for the financial year under review as against the loss before and after tax of Rs 555.04 crore for the previous financial year, registering an increase of 13 per cent.
The company signed the Concession Agreement with the then Government of Andhra Pradesh (undivided) in September 2010 and completed the financial closure for the Project in March 2011.
A consortium of 10 banks led by the State Bank of India has sanctioned the entire debt requirement of the project.
Due to the delay and cost overrun, the concessionaire had submitted claims amounting to Rs. 3,756 crores to the state government in March 2017, which further enlarged to Rs 5,000 crore by the time metro was fully commissioned in February 2020.
Even after commissioning, financial stress of concessionaire continued as the Covid-19 pandemic struck the world resulting in complete shutdown of the Metro for a period of 169 days followed by continued impact on ridership till date due to change in working culture- work from home and travel cultures.
L&T Metro Rail also expressed its inability to participate in the Chief Minister Revanth Reddy government’s ambitious expansion of the elevated rail corridor projects Phase-II A and Phase-II B as PPP partner.
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