Hyderabad Metro Rail plans to go back to square one after fresh review decision

Phase II of the HMR remains in limbo as the state cannot form a joint venture with the Center without first taking control of Phase I from L&T with a proposed loan to ensure seamless integration between the two phases. | Photo credit: NAGARA GOPAL

The long wait for Hyderabad Metro Rail (HMR) expansion has dragged on as the Center and the Telangana government have decided to have SBI Capital Markets (SBI Caps) re-valuate Phase I and vet plans for an expanded network of up to seven corridors of 122 km for Phase II.

The move raised more questions than answers. In particular, there is no clarity regarding the pending loan disbursement of ₹13,527 crore from the Indian Railway Finance Corporation (IRFC), despite an agreement signed with the state government last month, or the timetable for SBI Caps to submit its report, informed sources said.

Earlier reports indicated differences between the Ministry of Railways and the Ministry of Housing and Urban Affairs over the issuance of a ‘No Objection Certificate’ (NOC), which apparently stalled the loan. This was even after IRFC’s CEO had publicly stated that the corporation was encouraged to fund metro rail projects after its ‘Navratna’ status. He claimed that Phase I of the HMR was “operationally profitable” and that the proposed loan could reduce the government’s funding costs by about 40%.

With the officials concerned tight-lipped, it is not clear whether L&T or the state government overlooked any conditions attached to the IRFC loan at the time of signing the agreement. “It is also possible that prior approvals were not obtained or the relevant authorities at the center were not kept in the loop, leading to the current situation,” the sources said, requesting anonymity.

While Chief Minister A. Revanth Reddy and Union Ministers Ashwini Vaishnaw (Railways), G. Kishan Reddy (Coal & Mines and Manohar Lal Khattar (MoHUA) have agreed on a joint oversight mechanism involving officials from both the Center and the state, there is no record of similar involvement of central officials in earlier efforts.

Earlier, Chief Minister Revanth Reddy and Mr. Khattar had agreed to appoint two officials each to review the HMR Phase I valuations being carried out by public sector entities – IDBI Capital for financial evaluation plus transaction advisor and DMRC International for technical evaluation of operational status. A committee of secretaries and later a cabinet sub-committee cleared the relevant reports.

Based on these two reports (unpublished), the Telangana government and L&T agreed on a capital contribution of around ₹ 1,462 crore and later an IRFC loan was secured. It now remains unclear whether SBI Caps will revisit the entire exercise or build on earlier findings. The development also coincides with the ongoing legal dispute between the state government and the SBI over the sale of a five-acre plot in Raidurg, sources said.

Although Mr. Kishan Reddy facilitated discussions with his cabinet colleagues to take the project forward, the HMR expansion now seems to be back to square one. Phase II of the HMR remains in limbo as the state cannot form a joint venture with the Center without first taking control of Phase I from L&T with a proposed loan to ensure seamless integration between the two phases.

Published – 23 Jun 2026 21:24 IST