TS to rope in Centre to keep Metro on track

HYDERABAD: The Centre is likely to step in or will be requested to resolve issues pertaining to execution of the prestigious `14000-crore Hyderabad Metro Rail Project.

A day after it became public that engineering giant Larsen & Toubro is contemplating exit from the project on the ground that it is no longer viable following bifurcation of Andhra Pradesh, the Telangana government and L&T officials did a damage control exercise to reaffirm that the transit system will be completed.

Officials of L&T first had a meeting with Telangana Chief Secretary Rajiv Sharma, which was followed by a brief interaction with Chief Minister K Chandrasekhar Rao.

According to sources, the Chief Minister was clearly unhappy over frequent reports appearing in the media suggesting that the metro project could be derailed.

This was impacting Brand Hyderabad and the image of Telangana government and the Chief Minister, sources said,is of the view that certain forces were working in this direction. The government then left it to L&T officials to clarify the position.

For the first time in February, 2014 and then, as recently as September 10, L&T Metro Rail shot off letters to the State Government essentially driving home the point that the 'adverse economic conditions' pursuant to creation of Telangana state badly affected the viability of the project.

Speaking to newsmen, L&T Metro Rail managing director VB Gadgil did concede that 'various issues' are cropping up during the course of execution of the project but they were trying to resolve them amicably.

In any case, such problems were common when a project of this size is being executed, he argued, at the same time reiterating that L&T will continue its association with the metro rail.

In the letters, however, the company pointed out that the project was conceptualised in two parts: a) construction of metro rail and generation of revenue through fare collection and b) development and commercial exploitation of adjoining real estate to ensure financial viability.

The second factor was impacted given the change in status of Hyderabad post-bifurcation. Of the total investment of `14,000 crore, the Government of India provided for `1458 crore as 'viability gap' while the rest was to be borne by the company. The State Government was expected to spend around `2000 crore towards land acquisition, shifting of utilities etc.

The Centre, according to sources, is keen that the Hyderabad metro rail should be a success given that it was the first to be taken up in PPP mode and any negative development could affect similar projects planned in other states.

Sources indicated that by raising questions relating to possible reduction in traffic volume and fall in real estate value in Hyderabad after bifurcation, L&T could pitch for the need for additional funding to make up for the possible slip in revenue from what was originally envisaged when the project was launched in 2011.

A press release issued by the Chief Minister's Office said that Chief Secretary Rajiv Sharma will travel to Delhi to meet with Central Government officials and metro rail expert E Sreedharan to obtain 'appropriate advice.' In other words, there are indications that the Telangana government seeks to involve the Centre to find a way out in the context of issues being raised by L & T.