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The Telangana government has decided to take over the Hyderabad Metro Rail Phase 1 from L&T Metro Rail Hyderabad (L&TMRH), marking the end of the Public-Private Partnership (PPP) model for the project. As part of a one-time settlement, the State will pay ₹2,100 crore to L&T for its equity investment
and also take over the project's debt of around ₹13,000 crore, according to an official announcement on Thursday.
Emergence of Hyderabad Metro Rail Phase 2
This decision was reached after discussions between Chief Minister A. Revanth Reddy and L&T Chairman & MD S.N. Subrahmanyan. The move is also aimed at clearing the path for Phase 2 of the metro, which is awaiting approval from the Centre as a joint venture with the State government. The transfer of ownership will be carried out carefully, ensuring all legal and financial requirements are followed.
Initially, the State had invited L&T to participate in Phase 2 as an equity partner, but the company declined. L&T also refused to sign an integration pact between Phase 1 and Phase 2, citing concerns about operations, revenue sharing, and costs. Instead, L&T offered to exit completely by selling its entire stake in Phase 1, making it a state-owned project. Following detailed talks on financial matters and debt restructuring, both sides agreed on the settlement. L&T highlighted that the government still owes ₹2,100 crore from an earlier interest-free loan of ₹3,000 crore, as per a 2022 agreement.
The government hopes this settlement will speed up approval for Phase 2, which includes 163 km of new metro lines (Phase 2A and 2B). The Centre had earlier expressed concerns about Phase 1 being private while Phase 2 was public, and insisted on clarity in operations. With this takeover, the government aims to remove that hurdle and push forward the expansion.
