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Telangana govt to provide Rs 3,000 crore loan for metro to recover from loss

The government will immediately provide 1,000 crore and the rest will be given in a phased manner, sources said. L&THMRL has a debt burden of 13,000 crore.

 Loss-making L&T Hyderabad Metro Rail Limited (L&THMRL) has a glimmer of hope as Telangana government has decided to provide 3,000 crore soft loan and also allow it to sell or lease some of the land parcels that were handed over to the company as part of the concessionaire agreement.

The government will immediately provide 1,000 crore and the rest will be given in a phased manner, sources said. L&THMRL has a debt burden of 13,000 crore.

This is apart from 2,000 crore loss the company has suffered in the past few years. The company’s plan is to reduce the debt burden to 8,000 crore after taking the interest-free loan from the government and also monetise 260 acres it owns.

The company is hoping to earn about 2,000 crore by way of selling land parcels in the next one to one-and-a-half years. “L&THMRL has asked for soft loans by invoking force majeure clause (which provides for waiver of damages). The state government has agreed to provide soft loan and also bail out the company from the huge losses,” a senior official said.

Official sources said once the government provides soft loans, the metro rail operator will postpone its divestment plans and instead agree to complete the leftover 5 km stretch between Mahatma Gandhi Bus Station and Falaknuma, which is part of the Jubilee Bus Station-Falaknuma corridor.

Interestingly, L&T group chief financial officer R Shankar Raman, in an interview in November 2022, had said that the Telangana government agreed to provide 3,000 crore soft loan and also okayed the proposal to monetise the land parcels. He said L&THMRL was suffering from losses due to low ridership, which is about 4.5 lakh commuters a day, and intended to reach 7 to 8 lakh commuters in the next few years. He also said they were trying to reduce the company’s debt burden.

Municipal administration special chief secretary Arvind Kumar, Hyderabad Metro Rail managing director NVS Reddy and L&THMRL representatives did not respond on the bailout plan.

The company, which made huge losses, especially during Covid-19 pandemic due to lockdowns and also poor ridership, has been urging the Telangana government to extend financial assistance. Its officials met chief minister K Chandrasekhar Rao and municipal administration minister KT Rama Rao a few months ago on the issue.

The government had constituted a committee with KTR and senior officials consisting of Arvind Kumar, finance special chief secretary K Rama Krishna Rao and industries principal secretary Jayesh Ranjan.

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