L&T seeks two more years for Hyderabad Metro Rail Project

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Hyderabad Metro

Hyderabad: Days ahead of the Global Entrepreneurship Summit in Hyderabad where Prime Minister Narendra Modi is expected to commission two stretches of the metro rail, Larsen & Toubro has sought additional time of more than two years to complete the project by November 2019. However, Telangana government has agreed to give the engineering firm further time only till November next year to complete the project.

The company, which had a deadline of July 2017 for completing the 72-km metro rail project that will criss-cross Hyderabad in three corridors, has managed to complete only two stretches of about 30 km, which are likely to become operational on November 28.

Thirty eight months after it had threatened to pull out of India’s largest metro rail project citing unfavourable business environment in Telangana, L&T Metro Rail (Hyderabad) has sought compensation for the delay in handing over land parcels as per the concession agreement.

The company has sought certain concessions as compensation for delays by government in providing continuous right of way (RoW) that affected the project’s viability. “We have agreed to time extension till November 2018 based on the report of independent engineers,” said NVS Reddy, managing director of Hyderabad Metro Rail, a Telangana government arm that oversees metro rail project’s implementation.

“As regards the cost overruns and additional financial support, there are some disputes and correspondence is going on,” he said.

L&T, which is also building five grade-A retail malls under transit oriented development (TOD), is seeking concessions such as cheaper power, longer sub-lease rights on TOD, security costs at metro stations, compensation for delays and scope of change, along with time extension. The company is also exploring various nonfare revenue generating initiatives to turn the project, which suffered huge time and cost overruns, viable ahead of the targeted time frame for completion.

The elevated metro rail project, for which a concession agreement was signed in September 2010, saw a cost overrun of nearly ₹4,000 crore, taking the project cost to more than ₹20,000 crore from ₹16,375 crore estimated earlier.

The earlier estimated project cost, which included cost of rail system and TOD, was to be funded by a term loan of ₹11,478 crore, equity capital of ₹3,439 crore and viability gap fund of ₹1,458 crore from the government. “As there have been delays from the government’s side in providing continuous RoW, the company has applied to the government for interim extension of time of scheduled completion date up to November 2019, keeping in view the present progress of the project,” the L&T management told its shareholders in a latest communique, a copy of which was seen by ET. “Rigorous follow up is on with the state government for favourable resolution of the power, sub-lease, security, compensation for delays and scope change, time-extension and other issues pending with the government,” the L&T management said.

1 COMMENT

  1. I am glad to note that The Metro Rail Project of Hyderabad is finally being inaugurated by Hon. PM today i.e.28th Nov.of 30 KMs out of 72 Kms planned earlier.Though the delay has been unavoidable due to various unforeseen aspects of the huge project this is a very satisfying achievement. Of course the main aim and concept of L&T is to earn on project as well as commercial exploitation of the costly land etc. it is advisable that they also realize that in Govt. projects such things happen as also their planning would also have contributed to the delay like concentrating more on the commercial aspect than the Technical planning, for example when we consultants had arrived at 4/5 Traction Substations to feed 72 kms. of electrified traction line of suburban system/Metro system they had argued saying they will be able to feed through TWO Traction Substations which has finally came back to FIVE. They have been provided 90 and 100 Hectares of land for Car maintenance as well as Commercial development at two places i.e. NAGOLE and Miyapur. I even now feel it is more than the normal requirement and L&T should be satisfied and be contended with the award and try to absorb the escalation part at least partially and must complete the project by the date State Govt. suggests. It is certainly not a loss to them but surely earn a good will and fame from this project completion. HOPE for the best.

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