The Telangana government’s plan to complete the acquisition of the Hyderabad Metro Rail (HMR) Phase-I network of 69.2 km from L&T Metro Rail Hyderabad (L&TMRH) by the end of this month appears increasingly uncertain, with financial, technical and policy-related issues yet to be resolved, according to senior officials familiar with the discussions.
Two consultants appointed by the government — IDBI Capital, engaged to conduct the financial audit of HMR Phase-I, has not presented its final report, while DMRC International, tasked with evaluating the technical condition of the network, is still finalising its findings as on date.
Preliminary observations by DMRC (Delhi Metro Rail Corporation International Ltd), suggesting that the government may need to invest about ₹1,000 crore towards repairs and maintenance, have already triggered internal debate.
Officials said it remains unclear whether this potential expenditure should be factored into the proposed takeover consideration of ₹15,000 crore — ₹13,000 crore in debt and ₹2,000 crore in equity or treated as a post-acquisition obligation.
While the government is considering paying the equity component through the Hyderabad Metropolitan Development Authority (HMDA) or its constituent agencies, officials acknowledged that there is no confirmation yet on whether L&T would accept a separation of equity and debt.
While the Indian Railway Finance Corporation (IRFC) has reportedly indicated, in principle, its willingness to take over the debt component at an annual interest rate of around 3.5%, officials cautioned that the concessional rate may apply only to a portion of the outstanding loans. Documentation and approvals, they added, are yet to be finalised. Plus, whether such a debt takeover would require explicit approval from the Centre is not known, adding another layer of complexity to the timeline.
The Centre’s nominee to the HMR Phase I acquisition discussions — Uttar Pradesh Metro Rail Corporation’s MD was supposed to but did not attend last week’s meeting, while the second nominee, expected to be from the Finance Ministry, is yet to be formally named. At the same time, the Centre has sought to distance itself from endorsing any specific outcome.
In an official communication, it stated that it has “neither given any direction nor recommended any particular option, including taking over HMR Phase-I by the Telangana government”. It further noted that “all operational options remain open” under the Metro Rail Policy, 2017, including a “single-operator model, multiple operators or a hybrid arrangement”.
The choice of model, it said, must be evaluated by the government and placed before the Centre for further examination, given the capital-intensive nature of the project. “Whether the valuation needs to be revisited once all reports and policy positions are on the table is upto the government to decide,” said a senior official requesting anonymity as deliberations are ongoing.
Published – March 21, 2026 07:49 pm IST
