Saturday, 8 October 2016

Hyderabad Metro for sale!

  • L&T is looking for buyer of its entire equity of its Hyderbad Metro project, due to financial difficulties.
  • KCR in his characteristic style, is dumping this project since its completion, credit goes to Congress party.
  • Like any other PPP infrastructure project, Hyderabad Metro proved it is not viable. This was amply warned by Delhi Metro chief Sridharan in the beginning itself.
  • Too much dependency on real estate projections has taken its toll. L&T's viability depended on retail monthly rents of about Rs.400/sft, where as going rates are below Rs.150/sft.
  • Now L&T is also afraid of possible operational losses, after its completion.
  • TRS Govt (KCR), even after 2.5 years didn't provide right of access for its completion and has turned Nelson's eye for providing viability gap funding of over Rs.2,000 crores or extending the contract agreement for suitable period so that L&T could raise money for its completion, even though it was well defined in agreement.
  • After spending Rs.10,000 crores during past 4 years, ironically only 50% is completed. Another Rs.10,000 crores needed for its completion due to cost escalations.
  • Nothing has been done for providing bus & private transportation facilities near to all Metro stations.
Now L&T facing 'ANTIPATHY' from state government, especially KCR,  has virtually stopped its construction activity and moved out all its staff to other projects else where. It is focusing on selling away its equity and exiting.  We will have to see incomplete Metro standing as a monument in middle of the main roads, gifted by KCR, at least for quite some time.

My View:
KCR, with autocratic nature, so far not released any money for completion of projects nearing its completion during Congress regime, except SRSP to Hyd drinking water pipeline that too in the last minute during May 2016 under threat of no drinking water for Hyderabad's western parts. See his audacious nature to dump Pranahitha-Chevella project where already Rs.8,000 crores was spent and cancellation of contracts will result in much more compensatory payments.

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