Hyderabad Metro takeover faces fresh delay as SBI Caps review takes centre stage
Hyderabad: The Centre has decided to rely on a comprehensive report from SBI Caps before taking a final call on the Hyderabad Metro takeover and future expansion plans, creating fresh uncertainty over the state government’s efforts to acquire Phase-I of the project and move ahead with Phase-II works.
The development came despite earlier studies conducted by IDBI and the Delhi Metro Rail Corporation (DMRC) on the financial, legal and technical aspects of the proposed takeover. The Telangana government had already used those assessments to hold discussions with L&T and move forward with agreements related to the acquisition process.
Officials said SBI Caps would now examine multiple aspects, including the valuation of Metro Phase-I assets, funding requirements for the takeover, selection of lending institutions, Phase-II expansion plans, project costs and future borrowing needs. The Centre is expected to take its next decision based on the consultancy firm’s findings.
The delay has also raised doubts over the proposed ₹13,600-crore funding arrangement that the state government was counting on for the Hyderabad Metro takeover. Chief Minister Revanth Reddy had recently stated that funding linked to Japanese financial assistance would be routed through the Indian Railway Finance Corporation (IRFC). However, uncertainty remains over the structure of the funding and the proposed joint venture model involving the Centre and the state government.
SBI Caps report to shape Hyderabad Metro takeover plan
The state government had identified the acquisition of Metro Phase-I as a key requirement for implementing the Phase-II expansion project. Officials estimated that nearly ₹15,000 crore would be required to settle obligations linked to L&T and complete the acquisition process.
As part of efforts to secure financing, the government approached IRFC and deposited ₹1,461 crore as its equity contribution in an escrow account under the proposed ₹13,600-crore loan arrangement. The government also incurred expenses related to loan processing and brokerage services. Despite these steps, the funding proposal has not moved forward.
Several engineering experts have argued that an earlier appointment of a consultant for Phase-II planning could have accelerated decision-making on both the takeover and expansion projects. Instead, the process is now expected to restart with a fresh evaluation by SBI Caps.
Officials indicated that the consultancy firm would require several months to complete its study. Only after the report is submitted will authorities decide on the lender and the next steps for the Hyderabad Metro takeover. As a result, clarity on both the takeover and Phase-II expansion may emerge only in 2027.
SBI Caps is a wholly owned subsidiary of the State Bank of India and provides investment banking, project financing, mergers and acquisitions, and advisory services. The firm had previously worked as a consultant for GHMC bond-based fund-raising initiatives.