HYDERABAD: Larsen and Toubro (L&T), the principal stakeholder in Hyderabad Metro Rail Phase I, has announced its intention to withdraw from the operations of Hyderabad Metro Rail Limited (HMRL) for Phase I and will not participate in the proposed Phase II expansion due to substantial operational difficulties and increasing financial losses.
In a letter to the Ministry of Housing and Urban Affairs obtained by TOI, KVB Reddy, Managing Director and CEO of L&T Hyderabad Metro Rail Limited (L&THMRL), detailed various complications arising from the separate management of stations from the two phases. The letter highlights that having different entities operate Phase I and Phase II stations would complicate coordination and hinder a seamless experience for commuters.
An HMRL official, who spoke on the condition of anonymity, elaborated: “Once the extension occurs, corner stations of Phase I, such as Miyapur and LB Nagar, will become part of Phase II. This dual management will pose significant challenges in monitoring operations due to differing ticket prices and trains operated by varying entities—including ours and those under state control.”
While the state’s response to L&T’s exit remains unclear, L&T has proposed selling its share to either the state or central government to facilitate a smoother transition.
The letter also raised additional concerns including maintenance standards, operational governance, capital expenditure responsibilities, and the division of revenue and costs among stakeholders.
Financial issues have also been a critical factor in L&T’s decision. The Metro project has incurred reported losses of Rs 6,000 crore due to cost overruns—from an initial estimate of Rs 3,756 crore to an eventual Rs 5,000 crore—and lower-than-expected ridership, particularly during the COVID-19 pandemic. Officials noted that despite multiple requests for financial aid and assurances from the state government, the promised support has not materialized.
This development comes at a challenging time, with the state government actively seeking central approval for Phase II. Experts warn that L&T’s departure, given its 10% ownership in Phase I, could complicate project execution and financing significantly.
Despite these setbacks, Metro officials remain optimistic about future developments. “There’s a positive angle here as well. With Phase II, more areas of the city will be connected, potentially increasing ridership and revenue. Additionally, with a private entity withdrawing, ticket prices may decrease, which could further bolster ridership,” commented another L&T official, who also wished to remain anonymous.
