Centre asks Telangana to raise loan directly for Hyderabad Metro Phase-I takeover

On Wednesday, the Ministry of Housing and Urban Affairs (MoHUA) requested the Telangana government to directly raise and service the proposed loan for taking over Hyderabad Metro Rail (HMR) Phase-I. Instead of routing the loan through the state's special purpose vehicle, Hyderabad Metro Rail Limited (HMRL), the Centre wants the state to handle the debt directly as a key prerequisite for a proposed 50:50 joint venture for the HMR Phase-II project in Hyderabad.

Union Ministers Ashwini Vaishnaw, Manohar Lal Khattar, and G. Kishan Reddy have urged Telangana Chief Minister A. Revanth Reddy to adopt this funding model, which is based on the Jaipur Metro model. Under the Jaipur model, the wholly state-owned Jaipur Metro Rail Corporation executed the first phase, while a 50:50 joint venture with the Centre took up the second phase.

According to officials, once the Phase-I entity is free of debt and liabilities, it would merge with the Phase-II joint venture. This would create a single entity jointly owned by the state and central governments to operate the metro services.

The proposed 50:50 joint venture structure for Phase-II will restructure project funding. Under this plan, loans will fund about 48% of the project cost, while the Telangana government will bear 30%, and the Centre will contribute 18%. The remaining 4% will come through public-private partnerships (PPP) for minor works.

This approach is intended to free HMR Phase-I from its current debt obligations, rather than keeping it burdened with a stalled ₹13,527 crore loan from the Indian Railway Finance Corporation. The state government plans to identify a suitable agency, with the assistance of SBI Caps, to fund the takeover of Phase-I from L&T at a lower interest rate.

The selected agency will assess the valuation of Phase-I and the financial aspects of Phase-II. Officials noted that a higher valuation of Phase-I and the Centre becoming an equal partner would make it easier to secure concessional loans from financial institutions. However, the arrangement would also grant the Centre a greater role in HMR affairs, including decision-making and the appointment of key officials.