Rs 22,000 Cr For Metro, It’s Advantage Revanth

Hyderabad: The arithmetic of the Hyderabad Metro Rail takeover from the concessionaire L&T has put Chief Minister Revanth Reddy-led Congress government in an advantageous position. The state-appointed consultant has calculated the minimum valuation of the project at Rs 22,000 crore against L&T's Rs 25,000 crore-plus.

"We agreed for a debt swap of Rs 13000 crore and an upfront payment of Rs 2,000 crore, capping the total cost of the takeover only at Rs 15,000 crore," Revanth Reddy pointed out while speaking with mediapersons on the sidelines of the recent Musi rejuvenation project presentation.

The Chief Minister was confident that the cash outflow of Rs 2,000 crore, or even more, could be recovered by monetising just one of many assets that would be transferred to the state government post-L&T's exit.

Maintaining that L&T too had outsourced operations, Revanth Reddy said the same agency could be continued for the smooth running of the service. The state was also not worried about the debt swap because the Centre-backed Indian Railway Finance Corporation is ready to fund that portion too at about four per cent interest, half the rate at which the original concessionaire raised loans.

The Chief Minister mooted the takeover of the project after his grandiose plan of massive expansion of the Metro Rail network to cover the Old City, and the proposed Bharat Future City faced roadblocks. While L&T was looking for an exit, leave alone expanding the network, the Centre had flagged operational difficulties if more than one operator was engaged in running the services.

Official sources told this correspondent that land parcels at Raidurg, Miyapur and a few other places that had been handed over to L&T and are lying vacant, besides the malls that the Metro Rail entity operated, could be put to effective use to make up for operational losses. "L&T, being a typical contractor, could not effectively market its malls, and this needs to be addressed on priority," a senior official explained.

Funding for the Metro Rail takeover by a Central agency, close on the heels of its in-principle approval to fund the Musi rejuvenation project, has given a political advantage to the Revanth Reddy government. "The Centre follows strict guidelines for financing projects. Its approval stands testimony of the soundness, both technically and financially, of the project," said Revanth Reddy.

The Centre has agreed to incorporate certain components of the Musi rejuvenation project in the newly set up Urban Challenge Fund. This gave the state government the confidence to launch and successfully execute the first phase of Musi rejuvenation project, estimated to cost Rs 7,000 crore.

For the Metro Rail takeover, the Asian Development Bank would extend a loan for half the cost, while the state could win 25 per cent from the UCF, leaving the state government with the task of raising only the remaining 25 per cent of about Rs 1,750 crore.