PPP or SPV? Hyderabad’s Metro search renews

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: Finally having shown the door to Maytas Infra, the Andhra Pradesh government is gearing itself up to work out either government or PPP models to get the Rs 12,000 crore Hyderabad Metro Rail Project moving at the earliest. The chief minister Y S Rajasekhara Reddy has called for a cabinet meeting on July 13 to evaluate options.

The government, according to senior officials, has three options for the project. It can go in for a fresh global bidding route or shortlist firms that have the capability and experience to execute metro projects and call for tenders from them. The third option is to follow the Chennai Metro model. For this project, which is estimated at Rs 14,600 crore, the government is taking a concessional overseas development assistance (ODA) loan from the government of Japan. A loan agreement has already been signed between the governments of India and Japan for the purpose. The loan portion would cover 59% of the cost of the project. And the balance would be borne by both the central and state governments. The central government would be contributing 15% of the cost of the project as equity and another 5% as subordinate debt, while the state government would hold 15% equity and contribute another 6% in the form of subordinate debt.

Senior officials feel global re-tendering process for the Hyderabad Metro would delay the project further. It would take at least 14 to 18 months to make any headway. Though there might not be any cost escalation, the other major worry is to find a bidder like Maytas Infra. Maytas Infra had not sought any financial grant and had actually offered to pay to the government around Rs 30,311 crore over a period of 35 years. If the government decides to go in for the second option of shortlisting, it can see some amount of progress in 10-12 months. Going the Chennai Metro route has a major advantage of being able to raise debt at a reasonably lower rate of interest, officials say.