STN: The Telangana government has decided to take complete control of Hyderabad Metro Phase 1. This marks the end of the public-private partnership model that was once considered the largest in the world for a metro project.
The state government will now handle liabilities of nearly ₹13,000 crore. It has also agreed to pay Larsen & Toubro (L&T) a settlement amount of ₹2,000 crore.
Why L&T Exited Hyderabad Metro Phase 1
The handover decision was made after a meeting between Chief Minister A. Revanth Reddy and L&T Chairman and MD S.N. Subrahmanyan on 25 September.
L&T’s subsidiary, L&T Metro Rail (Hyderabad) Ltd., was operating line 1. However, the project has been causing continuous financial losses.
In its FY25 annual report, L&T reported a net loss of ₹626 crore from the metro project. Its operating and other income also fell by 21% to ₹1,109 crore. These losses made the company formally request an exit from the venture.
Under the new arrangement, the state government will take over the project debt and give L&T a one-time payout to buy out its equity stake.
Future of Hyderabad Metro Expansion
During talks, Chief Minister Reddy encouraged L&T to join Phase 2 of the metro. But L&T declined to participate as an equity partner. The company expressed concerns about financial structuring and did not commit to any agreement on cost-sharing or revenue models.
With the takeover of Metro Phase 1, the state can now push for central clearance of Phase 2. However, without a private partner, the financing and execution of the next phase could follow a new approach.
FAQs on Hyderabad Metro Phase 1
A: It covers about 69 km. It connects Nagole to Raidurg (Miyapur stretch), LB Nagar to Miyapur, and Ameerpet to HITEC City.
A: Commercial operations of the first stretch began in November 2017. By 2020, the entire Phase 1 became fully operational.
A: The main reasons were high debt, lower-than-expected passenger numbers, and limited government financial support. The COVID-19 pandemic also reduced ridership significantly.
A: Employees are expected to be absorbed into the new structure under the Telangana government, though the exact framework has not been announced.
A: The government plans to seek central clearance and may depend more on public funding and loans, instead of a private-public partnership.
