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L&T Metro Rail to invoke force majeure clause for loss of ops in Hyderabad

Published Aug 10, 2020, 2:30 pm IST
Updated Aug 10, 2020, 2:30 pm IST
Hyderabad's metro has not been in operation since March 22
While services of the Hyderabad Metro have been shut down, maintenance runs have been continuing.  DC Photo: P. Surendra
 While services of the Hyderabad Metro have been shut down, maintenance runs have been continuing. DC Photo: P. Surendra

Hyderabad: With uncertainty looming over resumption of metro rail services in Hyderabad, L&T Metro Rail (Hyderabad) Limited may invoke the force majeure clause in its deal with the Telangana government seeking extension of the concession period equivalent to the time it could not operate due to the lockdown, the company has said in its latest annual report.

The concession period of the project is 35 years, calculated from the appointed date of July 5, 2012 including the initial construction period of five years. This is extendable for a further period of 25 years, subject to fulfilment of certain conditions by the special purpose vehicle as set out in the concession agreement.


L&T Metro Rail (Hyderabad) said it has already submitted the project cost overrun details to the state government for Rs 3,756 crore and "has been pursuing the matter with the government for providing relief."

The original cost at the time of conception was Rs 16, 375 crore which has now crossed Rs 20,000 crore.

Metro Rail operations in Hyderabad came to a standstill from March 22 due to the lockdown announced by the Centre to contain the coronavirus.

"...However, the company is protected by the force majeure clauses of the Concession Agreement to claim extension of concession period equal in length to the period during which the Concessionaire was prevented from collection of Fare and reimbursement of force majeure costs. The management of the company will study the impact and will lodge appropriate claims within reasonable time once the operations are resumed," it said the annual report.


Hyderabad and Mumbai are the only two cities in the country where Metro Rail is operated by private players under PPP (public-private partnership) mode and hence the resumption of operations is essential for the healthy survival of the concessionaire, an expert of the public transport said.

The company's revenues from operations and other income for 2019-20 stood at Rs 598.20 crore (including fare and non-fare revenue) as against Rs 318.46 crore for the previous financial year.

The loss before tax and after tax were Rs 382.21 crore for the financial year under review as against loss before and after tax of Rs 147.32 crore and Rs 148.15 crore respectively for the previous financial year.


The Concession Agreement includes construction of 71. 16 km of elevated metro rail corridor and rights for real estate development of 18.5 million sft, with strategically located land parcels interspersed in prime city locations adjoining metro stations and metro corridors.

During an interaction with netizens through Twitter, Telangana Minister K T Rama Rao on Sunday said "We are waiting for the nod from Govt of India" on resumption of metro rail services in the city."

Location: India, Telangana, Hyderabad