Hyderabad Metro: With Phase-I complete, the city now boasts India’s second-biggest Metro network

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February 24, 2020 2:02 PM

While questions have been raised about the viability of the project, experts say any Metro project of such size is expected to incur losses for at least the first 5-6 years of operations because of the huge debt burden, which in Hyderabad Metro’s case is about Rs 11,000 crore.

Signing the concession agreement with the then government of Andhra Pradesh in September 2010, Larsen & Toubro began construction work in June 2012

Touted as the world’s largest public-private partnership (PPP) project in the Metro sector, the Hyderabad Metro became the second largest Metro network in India (69.2 km) when the  11-km-long Corridor-II connecting the twin cities of Secunderabad and Hyderabad was flagged off recently. The launch of the Green Line marked the completion of Phase-I of the city’s Metro project.

Linking Jubilee Bus Station (JBS) to Mahatma Gandhi Bus Station (MGBS), the Green Line with 9 stations is expected to reduce travel time between the two destinations to just 16 minutes from the 45 minutes it takes by road. Comprising three corridors—Red Line or Corridor-I from LB Nagar to Miyapur (29 km), Green Line or Corridor-II from JBS-MGBS (11 km) and Blue Line or Corridor-III from Nagole to Raidurg (29 km) – Phase-I of the project has been executed by the L&T Metro Rail Hyderabad Ltd (LTMRHL), a special purpose vehicle (SPV) set up to implement it on a Design, Build, Finance, Operate and Transfer (DBFOT) basis.

Signing the concession agreement with the then government of Andhra Pradesh in September 2010, Larsen & Toubro began construction work in June 2012, with operations being launched in November 2017. A consortium of
10 banks led by the State Bank of India sanctioned the entire debt requirement for the project, making it the largest disbursement for a non-power infrastructure PPP project. While the cost of the project was initially estimated at Rs 14,132 crore, revised estimates say about Rs 16,511 crore has been spent so far on it. Citing cost escalation of over Rs 3,000 crore owing to delay over right of way issues, the concessionaire is in  talks with the state government for adequate compensation.

While questions have been raised about the viability of the project, experts say any Metro project of such size is expected to incur losses for at least the first 5-6 years of operations because of the huge debt burden, which in Hyderabad Metro’s case is about Rs 11,000 crore. In what constitutes good news, daily ridership on the network has crossed the 4-lakh mark, being expected to go up to 10 lakh over time, with the project being operationally break-even today.

Says KVB Reddy, MD & CEO, LTMRHL, “we remain committed to providing best-in-class mobility, connecting and creating vibrant urban spaces. The Hyderabad Metro has transformed Hyderabad into one of India’s most modern cities, with an integrated urban transportation system that allows for inter-modal connectivity. Features we have introduced like TSavaari App and QR Code access with different service providers signal the beginning of an era of seamless and hassle-free commuting.”

But the going hasn’t been easy for the project. From existence of underground utilities and lack of readily available drawings to clash of jurisdiction between departments and agencies to the long-drawn process of approvals, especially land acquisition, to felling of trees and design changes, it has faced a host of challenges. And there have also been financial challenges, including interest rate fluctuations, cost overrun risks and financial market volatility, recalls NVS Reddy, MD, Hyderabad Metro Rail Ltd (HMRL).

On the question of viability, he says, “we have developed the Hyderabad model after studying the Singapore, Hong Kong, Tokyo and Taipei Metro projects, which have been making money. Under this, 50% of revenue would come from passenger fare, 45% from property development and 5% from advertisements and other sources.” The project is expected to break even by the fifth or sixth year of operations, he adds.

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