The decision followed a year-long stalemate over the state’s phase II proposals, covering nearly 163 kilometres under phases 2A and 2B.
Published Sep 25, 2025 | 9:08 PM ⚊ Updated Sep 25, 2025 | 9:08 PM
Talks were led by Chief Minister A Revanth Reddy with L&T Group Chairman and Managing Director SN Subrahmanyan.
Synopsis: The Telangana government will assume full ownership of Hyderabad Metro Rail’s phase I from L&T Metro Rail Hyderabad Ltd by taking over its ₹13,000 crore debt and paying ₹2,000 crore for equity. The agreement follows L&T’s decision to exit the project and its refusal to join phase II as a partner. In a statement, the government said final terms of the transfer will be settled through further consultations.
The Telangana government has decided to assume full ownership of Hyderabad Metro Rail’s phase I project from L&T Metro Rail Hyderabad Ltd (LTMRHL), taking over its debt and equity as part of an agreement reached in principle during discussions on Thursday, 25 September.
The metro, covering 69.1 kilometres with 57 stations across the Red, Blue and Green lines, is currently owned and operated by LTMRHL, a special purpose vehicle created under a public-private partnership between the Telangana government and construction company Larsen & Toubro (L&T).
L&T holds a 90 percent stake, while the state government holds the rest. Thursday’s decision is aimed at breaking the deadlock that has delayed approvals for the phase II expansion of the metro network.
Talks were led by Chief Minister A Revanth Reddy with L&T Group Chairman and Managing Director SN Subrahmanyan, along with senior officials from both sides.
According to a statement issued by the state, it was agreed that the government would “take over the Phase-I Metro Rail project by taking over the debt of the project, which now stands at about ₹13,000 crore. Further, the state government will pay about ₹2,000 crore to L&T towards their equity investment in LTMRHL as a one-time settlement.”
The discussions followed a year-long stalemate over the state’s phase II proposals, covering nearly 163 kilometres under phases 2A and 2B.
The Union government, which must approve the plans, has insisted on a “definitive agreement” integrating operations between the existing phase I, owned and operated by L&T, and the proposed state-run phase II. It also asked L&T to participate in the new project as a joint venture partner.
L&T, however, expressed its inability to comply. The statement read, “CMD L&T reiterated that L&T will not be able to participate in Phase 2 metro project as an equity partner since it has exited the business of ownership and operation of transportation concession assets.”
The company also declined to sign the definitive agreement, citing “major concerns regarding seamless train operations between the two phases and regarding revenue and cost sharing mechanisms.”
Instead, L&T offered to divest its stake in phase I, paving the way for a full exit from the project. “He reiterated the offer to divest their complete stake in Phase 1 metro to the State government, which will make Phase I a state government entity,” the statement read.
This exit comes at a price for the Telangana government. L&T had initially sought repayment of its equity pegged at about ₹5,900 crore, in addition to the takeover of debt. The company also pointed out that under a supplementary concession agreement signed in July 2022, the government had yet to pay ₹2,100 crore of the ₹3,000 crore interest-free loan committed to the project.
After negotiations, the settlement amount was reduced to ₹2,000 crore in equity, alongside the assumption of debt worth about ₹13,000 crore.
Officials said the exact terms of the transfer would be finalised through further consultations. “The conditions of the takeover shall be worked out with mutual discussions and the process will be carried forward in a carefully calibrated and mutually agreeable manner, duly ensuring all legal and statutory compliances,” the statement read.
With the state government taking over ownership, maintenance and operation of the entire Hyderabad Metro Rail, questions remain over whether the system will continue to function smoothly or encounter new challenges.
(Edited by Dese Gowda)
