Hyderabad: The Telangana govt has lost all hopes on financial evaluation of Hyderabad Metro Rail project by SBI Capital Markets (SBI Caps), and has begun exploring alternative funding options to complete takeover of metro rail phase I.The SBI Caps exercise was expected to evaluate the financial viability of Hyderabad Metro Rail phase I assets, facilitate debt refinancing and help structure funding for the proposed phase II network.“The govt is scouting for the banks or financial institutions that provide loan in Japanese currency (yen) which comes in the lesser interest rate, while the other banks and financial institutions’ interest rates in India are around 8%. If the loans are taken at a higher interest rate, it is difficult to run the metro rail,” a senior official of the municipal administration department told TOI.Officials said institutions such as Japan International Cooperation Agency generally finance new capital expenditure projects and not refinancing exercises such as the Hyderabad metro rail phase 1 takeover.The prevailing uncertainty over a proposed ₹13,600 crore loan from the Indian Railway Finance Corporation (IRFC) has also forced the state govt’s rethinking, sources said.“Some Union ministers have assured the state govt on SBI Caps’ evaluation. Once the evaluation is done, the Centre was supposed to take equity in the metro phase I. However, we came to know that the Centre will not involve itself in the metro phase I and the entire process has come to a halt now,” a senior official said.Chief minister A Revanth Reddy wrote to both IRFC and the Union ministry of housing and urban affairs, but neither the terms of reference nor formal orders appointing SBI Caps have been shared with the state, sources said.Official sources said the chief minister directed officials to examine other financing avenues, amid the absence of any progress on the two key commitments–release of the IRFC loan and initiation of a comprehensive assessment of the metro project by SBI Caps–made by the Centre. “The prolonged delay has prompted the govt to look for backup funding arrangements,” sources said.The delay has also affected the timeline for the metro phase I takeover. Unable to complete refinancing, the govt has fallen behind its planned acquisition schedule. Recently, L&T informed the National Stock Exchange that it had extended the expected completion timeline for the sale of its 100% stake in L&T Hyderabad Metro Rail to Sept.The state govt entered into an agreement with L&T in April to acquire Hyderabad Metro Rail phase I, with the takeover originally scheduled to take effect from May 1. The IRFC had initially approved a ₹13,600 crore loan for the transaction and signed an agreement with the state govt. The first instalment of the loan was expected to be released on May 27. However, the funds have not been disbursed so far.Following meetings between Revanth and Union ministers Manohar Lal Khattar, G Kishan Reddy and Ashwini Vaishnaw, it was decided that SBI Caps would conduct a financial evaluation of both metro phase I and the proposed phase II project. The state govt subsequently nominated special chief secretary Jayesh Ranjan as its representative for the process.
