Hyderabad Metro Rail project has escalated by Rs.2,500 crore to Rs.3,000 crore, said L&T Metro Rail Hyderabad Limited (LTMRHL), the developer of the elevated metro project in public private partnership.
LTMRHL chief executive and managing director V. B. Gadgil told reporters here Tuesday that the project is in a "very very precarious mode". He attributed the cost overrun to high inflation and increase in interest rates by 13 to 14 times during last three years.
The cost escalation does not include realignment on two corridors proposed by the Telangana government. Gadgil said they had not yet received any communication from the government regarding realignment.
He called for immediately addressing all issues with regard to proposed realignment, saying the delay would further escalate the cost. He pointed out that work on some sections was stopped for three months.
N. V. S. Reddy, managing director, Hyderabad Metro Rail (HMR), had earlier stated that the realignment will lead to cost escalation upto Rs.400 crore. Gadgil said they completed 28 percent of the project and were confident of overcoming all challenges.
"Notwithstanding the hurdles and roadblocks, the extent of work completed in 25 months is record not just in the country but I think in the world," he said and exuded confidence of meeting March 2015 deadline for opening for public the eight-km stretch on the first corridor, where test runs on seven trains are currently on.
The cost of the project at the time of signing of concession agreement on Sep 4, 2010 was Rs.14,132 crore. Gagdil pointed out that there was already a delay in declaring the appointed date and the work could only commence in July 2012.
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The LTMRHL is building 72-km elevated metro project, said to be the biggest project in the world in public private partnership.
Gadgil said they so far spent about Rs.5,000 crore on the project. This includes Rs.1,500 crore from equity and Rs.3,500 crore from bank loans. To a query, he said the firm had dropped the proposal for external commercial borrowing (ECB).
The project developer is also working on swapping high cost debts with low cost one to the tune of Rs.1,000 crore.
LTMRHL in 2011 had achieved financial closure for Rs.16,375 crore - Rs.14,132 crore for metro rail system and Rs.2,243 crore for the first phase of real estate development.
Both the components of the project are being financed through an equity of 30 percent and 70 percent by debt.
LTMRHL has raised the debt of nearly Rs.11,500 crore from a consortium of 10 banks. The current cost of borrowing is 12.5 percent