122.9 km ₹38,595-crore Hyderabad Metro Rail expansion plan awaits Centre-State JV

Chief Minister A. Revanth Reddy is in New Delhi to make a fresh push for the Centre’s approval of the Telangana government’s proposal to take over the 69.2-km Phase I Hyderabad Metro Rail (HMR) network from L&T Metro Rail Hyderabad Ltd and form a joint venture for the long-pending Phase II expansion project.

HMR Phase II network, spanning 122.9 km, is estimated to cost ₹38,595 crore and is expected to be implemented through a Centre-State joint venture with equal equity participation. However, the plan remains stuck in a complex mix of financial, regulatory and administrative hurdles, requiring multiple approvals from the Centre.

Officials concerned say the government cannot access low-interest funding for the proposed acquisition or proceed with the metro expansion without clearances from the Centre, as provisions under the Railway Act and Metro Rail Act necessitate central involvement at various stages.

“Even when metro rail systems are developed by State governments, safety certification are issued by the Commissioner of Metro Rail Safety (CMRS) under the Ministry of Civil Aviation. The officer is generally drawn from railway engineering services,” explained a senior official familiar with the process.

Hence, Chief Minister and senior officials have been making repeated representations to key ministries, particularly the Union Ministry of Housing and Urban Affairs (MoHUA), to expedite approvals. SBI Capital Markets (SBI Caps), engaged by the government, is currently exploring the possibility of securing a soft loan of around ₹13,500 crore through entities operating from Gujarat’s GIFT City.

This is Telangana’s second attempt to arrange financing for the takeover. An earlier proposal involving a ₹13,527-crore loan from the Indian Railway Finance Corporation (IRFC) collapsed despite a high-profile announcement in May.

It ran into trouble after the Ministry of Railways reportedly pointed out that IRFC’s mandate is limited to financing new infrastructure projects and not refinance existing assets. Officials admit it remains unclear how this limitation was overlooked during earlier discussions.

Hope of a breakthrough emerged following a high-level meeting in June between Mr. Revanth Reddy and Union Ministers Ashwini Vaishnaw, G. Kishan Reddy and Manohar Lal Khattar. The meeting resulted in a roadmap aimed at resolving the impasse.

The proposed solution involved appointing SBI Caps to identify a lender willing to provide a soft loan to be serviced by the government rather than HMR. It also envisaged merging Hyderabad Metro Rail with Hyderabad Airport Metro Limited (HAML), followed by the Centre acquiring a 50% stake in the unified metro entity.

But, it is still unclear whether all Central ministries have formally approved the proposed funding model. HMR authorities are confident and point to clearances obtained from Reserve Bank of India (RBI) and that statutory assurances required for the borrowing plan are in place.

The government is prepared to release its equity contribution of ₹1,462 crore to L&T, based on valuations conducted by IDBI Capital and DMRC International, once the loan is secured and if SBI Caps is in sync with the valuation.

Meanwhile, efforts are also under way to procure 60 additional coaches for the existing metro network, though these too require statutory clearances from agencies such as the Research Designs and Standards Organisation (RDSO) and the CMRS.