Telangana Govt Extends Deadline for Metro Takeover to April 30

Hyderabad: The state government has extended the deadline for the takeover of the Hyderabad Metro Rail project from Larsen & Toubro (L&T) by one more month till April 30, official sources said on Friday. The original deadline approved by the state cabinet was March 31, but the takeover process could not be completed due to pending financial arrangements, particularly relating to the assumption of L&T’s Rs 13,000 crore debt and payment of about Rs 2,000 crore towards equity.

Sources said the government had approached the Indian Railway Finance Corporation (IRFC) to secure funding of Rs 13,000 crore required to take over L&T’s debt and has already received in-principle approval. However, the state government has now submitted a revised proposal seeking 75 per cent of the loan in Japanese Yen and the remaining 25 per cent as a rupee-denominated term loan, sources added.

The move is aimed at swapping L&T’s existing high-interest loans, taken from commercial banks, with lower-cost borrowings through IRFC to reduce the interest burden on the state exchequer. Officials said the disbursement process for the Japanese Yen component is expected to take about a month, necessitating the extension of the takeover deadline.

Official sources said the interest rate on Japanese Yen loans is expected to be in the range of 1.5 to 2 per cent, significantly lower than rupee loans. The blended rate for the combined borrowing — 75 per cent in Yen and 25 per cent in rupees — is estimated at around 3 to 4 per cent, compared to nearly 10 per cent currently being paid by L&T on its Rs 13,000 crore loans sourced from a consortium of 10 public sector banks led by State Bank of India.

The lower rates are linked to External Commercial Borrowings (ECB) accessed by IRFC, which are benchmarked to the Tokyo Overnight Average Rate (TONAR). Recently, on February 25, IRFC raised a Japanese Yen-equivalent of $400 million through ECB from a consortium led by Sumitomo Mitsui Banking Corporation and MUFG Bank Ltd as part of its strategy to diversify funding sources at competitive rates. The IRFC raised these loans to fund railway infrastructure projects in India.

It may be recalled that the Legislative Assembly, on March 28, passed a resolution to take over the 69-km Hyderabad Metro Rail Phase-I project from L&T. The state will assume over Rs 13,000 crore in debt and pay approximately Rs 2,000 crore in equity as part of the acquisition, which is valued at around Rs 15,000 crore.

The takeover will be executed through Hyderabad Metro Rail Limited (HMRL), converting the project into a state-owned entity, with L&T exiting the public-private partnership (PPP) venture. The move is aimed at enabling smoother expansion of Phase-II projects, including Phase II(A) spanning 76.4 km and Phase II(B) covering 86.1 km.