L&T says Hyderabad Metro Rail to be completed in Dec 2018

While 5-year deadline ends July 2017, L&T deputy MD says time and cost overruns need to be sorted out to take project forward

L&T Limited, the concessionaire of the Rs 16,000-crore Hyderabad Metro Rail, on Wednesday indicated that project was likely to be completed in December 2018, much beyond the five-year deadline that expires in July 2017.

Despite faster progress achieved on the ground during the last three-and-a-half years, L&T Metro Rail (Hyderabad) Limited has been facing time and cost overruns owing to delays that it has attributed to the grant of right of ways among other things.

L&T deputy managing director and president S N Subrahmanyan, who is also the chairman of the Hyderabad Metro, said the company has been discussing with the government and other stakeholders on taking the project forward by sorting out these issues.

The company so far has spent about Rs 10,000 crore on the project, including Rs 2,800 crore from its equity and about Rs 600 crore from the Viability Gap Fund (VGF) being provided by Government of India. About 60 per cent of the work has been completed, according to the officials.

Besides seeking to address the 18-month delay expected to arise in project completion, the company is also expecting a solution for the problem of cost overrun, estimated to be around Rs 3,000 crore, from the state government as well as the Centre.

"The project is financed by equity, debt and the VGF. Equity has more or less come and the debt is coming. The third is the VGF which we have bid for. But there is a viability issue here. We need to enter into a dialogue with the government on how to take this forward. This is not a government investment. It is a private investment," Subrahmanyan told reporters in response to a question if the project was heading for arbitration on these matters.

The company has already approached the Centre for enhancement of the VGF from the level of Rs 1,458 crore approved in 2013 besides representing the matter of cost escalation to the Telangana government. A third party engineer has already been looking into these claims, according the company sources.

V B Gadgil, the outgoing chief executive and managing director of L&T Metro, who has been heading the project since the signing of concession agreement in September 2010, said the project has reached a significant stage and the 19 km stretch out of 72 kms will be technically ready by the middle of June 2016. The construction of three malls, which are a part of the transit-oriented development (TOD) component of the project were also getting completed, according to him.

New CEO and MD appointed

The company has appointed Shivanand Nimbagiri as the new managing director and chief executive officer of the L&T Metro Rail (Hyderabad) Limited in place of V B Gadgil, who is retiring from service after serving the L&T for 44 years. Prior to joining L&T Metro, Shivanand was the MD and CEO of Sembcorp Green Infra Limited. Earlier he worked in Alstom for ten years.

Nimbagiri said the Hyderabad Metro Rail will become a golden standard for metro rail projects in the country.