HYDERABAD (Metro Rail News): L&T, the promoter of the Hyderabad Metro rail, has sought financial assistance from the Telangana state government to save it from a wrenching cash crisis triggered by the coronavirus lockdown. The financial bailout will enable the metro corporation to stand on its feet and avoid huge losses, said people familiar with the matter. Hyderabad Metro was closed for months together during the lockdown. The metro rail has been operating at 50 per cent capacity since resuming operations.
Even so, commuters have been staying away for fear of contracting COVID-19, and this is preventing the metro from scaling up operations, making any recovery difficult. A Hyderabad Metro Rail (HMRL) official spokesperson said: “Due to the huge financial burden on us we are exploring different options with stakeholders. Though inevitable this situation has caused serious financial loss.” L&T didn’t respond to queries. The amount of “financial assistance” being sought has not yet been made public although the spokesperson said the losses were “serious”. An estimated loss of Rs 300 crores is thought to be incurred on the L&T Metro according to sources.
An official said, “our primary focus is to continue operations adhering to safety norms to keep passengers safe,” and did not reveal the exact amount sought. The Telangana government, itself facing a severe financial crunch, has been keeping mum on the matter. The sources knowing about the developments told that the state government is in a bind because it knows that the promoter, L&T, could well attempt to take recourse to the ‘force majeure’ clause in the concession agreement to threaten to walk out of the project in the case of unforeseen events.
Hyderabad Metro can invoke the clause to not abide by the terms of the agreement in the case of unforeseen events as defined under the section on force majeure. However, there is a catch: the metro was non functional for 169 days and the force majeure clause can be invoked if the metro remained shut for 180 days. This is seen as the reason why it has sought financial assistance instead of taking the force majeure clause.