Says project needs urgent financial support to tide over situation and establish financial viability
HYDERABAD: L&T Metro Rail Hyderabad Limited (L&TMRHL), the concessionaire for Hyderabad Metro Rail project, has sought additional financial support of Rs.3,756 crore to facilitate completion of the project.
In a letter to the government on October 10, L&TMRHL has appealed for help, stating that the project needs urgent financial support to tide over the situation and establish financial viability.
It said the project funding was suffering due to reasons beyond the control of L&T or the State government. Hence, assistance is being sought from the Central government as well to sustain the project, L&TMRHL said in the letter.
The letter further stated that the concessionaire had exhausted all its means of financing and is currently starved of funds to complete the project. Since all sources of funding are exhausted, infusion of funds is needed from the government.
The letter comes after L&TMRHL held meetings with senior government officials in August seeking financial support. During the meeting, the concessionaire was asked to submit details on its financial requirements. The same had to be reviewed and necessary recommendations made to the Central government for approval.
According to sources, L&TMRHL has said that the delay in handing over land parcels as planned under the Concession Agreement led to the project being delayed by more than 15 months.
The concessionaire said it had achieved financial closure by tying up for a debt component of Rs.11,478 crore with a consortium of banks led by State Bank of India. Since the Right of Way (ROW) was not available on the appointed date, the same got deferred, resulting in the increase of project cost by about Rs.770 crore. The same was absorbed by the concessionaire.
However, the concessionaire continues to face various issues beyond its control. Works were commenced only on stretches where ROW was available and at other locations, while the control of land lay with the Ministry of Defence, Cantonment Board and Ministry of Railways, which in turn, has adversely impacted the project’s progress.
The new Land Acquisition Act in 2013 further delayed land acquisition, while increments in interest and forex costs, service and sales taxes, excise duty and GST have added additional financial stress, the letter said.