Hyderabad Metro Rail Phase 1 to Become State-Owned as Telangana Government Takes Over from L&T

The Telangana government has decided to take over Phase 1 of the Hyderabad Metro Rail (HMR), marking the end of the Public-Private Partnership (PPP) model with L&T Metro Rail Hyderabad (L&TMRH). The move follows a one-time settlement agreement in which the government will pay ₹2,100 crore to L&T towards its equity investment and assume responsibility for project debt of nearly ₹13,000 crore.

The decision was reached after detailed discussions between Chief Minister A. Revanth Reddy and L&T Chairman & Managing Director S.N. Subrahmanyan, alongside senior officials from both sides. The settlement aims to resolve long-standing issues and clear the path for Phase 2 of the metro project, which awaits central approval for execution as a joint venture between the Centre and the State.

Initially, the State had invited L&T to join Phase 2 as an equity partner. However, L&T declined, citing challenges in integrating Phase 1 operations with the proposed expansion. Concerns over revenue sharing, cost mechanisms, and seamless operations led the company to instead propose divesting its stake in Phase 1, thereby transferring full ownership to the government.

Financial restructuring formed a key part of the talks. L&T had earlier sought government takeover of ₹5,900 crore in debt while pointing out pending dues under the Supplementary Concession Agreement of 2022. Eventually, both sides agreed to a structured settlement covering equity, debt, and loan repayment, with all legal compliances to be followed.

The government has ambitious plans for metro expansion, having submitted proposals for Phase 2A and 2B that together span 163 km across eight new corridors. However, the Centre had expressed reservations about approving Phase 2 while Phase 1 remained under private ownership. This takeover is expected to address those concerns and accelerate approvals.

Key officials, including Chief Secretary K. Ramakrishna Rao, Urban Transport Advisor N.V.S. Reddy, and senior L&T executives, were present during the discussions. With this transition, Hyderabad Metro is set to move entirely into the public domain, aligning with the government’s vision of expanding urban transport infrastructure across the city.