HYDERABAD (Metro Rail News): The Telangana government has formally agreed to take full control of Phase 1 of the Hyderabad Metro Rail, which can be seen as a setback for the world’s largest PPP in metro project. Under the agreement, the government will take on liabilities of around ₹13,000 crore and will pay Larsen & Toubro Ltd. (L&T) a settlement of ₹2,000 crore.
This decision was finalized after discussions between Chief Minister A. Revanth Reddy and L&T Chairman and MD S.N. Subrahmanyan on 25 September.
Hyderabad Metro Phase 1, currently operated by L&T’s subsidiary L&T Metro Rail (Hyderabad) Ltd., has been a persistent financial burden for the company. In its FY25 annual report, L&T reported a widened net loss of ₹626 crore from the project, alongside a 21% decline in operating and other income to ₹1,109 crore.
The increasing losses and limited government support led L&T to formally express its intent to withdraw from the venture. Under the new arrangement, the state will take over the debt and provide L&T with a one-time payout for its equity exit.
Although Chief Minister Reddy encouraged L&T to contribute to Phase 2 of the metro, the company declined to participate as an equity partner, citing concerns over financial structuring. L&T Chairman and MD S.N. Subrahmanyan also refrained from committing to any agreement on cost-sharing or revenue models.
With the finalisation of handover, the Telangana government is now positioned to secure central clearance for the next phase. However, the absence of a private partner could alter the financing and execution approach for Hyderabad Metro’s Phase 2.
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