The Hyderabad Metro project being implemented by Larsen and Toubro (L&T) is running behind schedule by 18 months, and is now expected to commence operations only by December 2018. Initially, it was supposed to get commissioned by July 2017.

The R16,000-crore project being implemented under L&T Hyderabad Metro Rail (Hyderabad) (LTMRHL), has already seen a cost over-run of R3,000 crore, pushing the project cost to nearly R20,000 crore.

L&T had bagged the Hyderabad Metro project on design, build, finance, operate and transfer (DBFOT) basis in 2010, and the project cost was pegged at a tad over Rs 12,000 crore then. At that time, the project was expected to be completed in four years. As part of the project, L&T also got real estate construction rights of over 18.5 million square feet.

Addressing the media in Hyderabad on Wednesday, SN Subrahmanyan, deputy managing director and president, Larsen & Toubro said that the company is in talks with the Telangana government on the delays and the financial implications of the same on the project.

“Since there are project delays and cost escalations, we are in discussions with the government and bankers,” he said.

LTMRHL has so far spent R9,000 crore on the project. This includes R2,700 crore as equity, and a debt of over R3,000 crore.

According to reports, L&T has already sought more time from the state government to extend the construction deadline and compensate it for the delays. The company has repeatedly stated that issues like finalisation of alignment, lack of continuous right of way in prime areas etc has hampered the progress of construction in the project. It has said that these issues were beyond the control of the project stakeholders and therefore it needs more time to complete the project.

In the last 2-3 years, there have also been instances of a face-off between the firm undertaking the project and the state government, and reports suggest that the concessionaire wanted to exit the project. However, L&T has not commented on these reports officially.

On Wednesday, Subrahmanyan said, “The project is moving forward. It’s a complex model and let us see how it evolves”.

VB Gadgil, the outgoing managing director and chief executive of LTMRHL also said that some parts of the project “will transit from developmental to operational mode”.

Gadgil will be retiring from his current post by the end of May, and will be succeeded by Shivanand Nimbargi with effect from June 1.
Prior to joining L&T, Nimbargi was the managing director and CEO of Sembcorp Green Infra Limited.