Why Center Agreed To Join Hyderabad Metro?

In a surprising twist of events, the Central Government agreed to join Hyderabad Metro.

Earlier, the Center did not agree and so, the project was executed in PPP Model with the State Government and L&T. Later, we know how L&T exited due to mounting losses offloading its entire share to the state government.

The Central Government, has now decided to join the project when Revanth Reddy Government is contemplating Phase II expansion with JICA loan.

The Center will appoint a consultant – SBI Caps which determine the exact valuation of the existing metro and the projected cost of the new metro.

It will also identify and arrange the banks to provide the total loan amount for both projects. It will secure loans at a lower interest rate than the 4 percent loan of JICA.

So why this sudden decision? There are probably two reasons behind this.

The first one is that Revanth Reddy is planning to make the Metro a GHMC election issue and so, the BJP would not allow him to take the credit.

The second factor is that the Metro possesses land assets worth several thousand crores. There are concerns in some quarters that, if adequate support for the Metro project is not forthcoming, the state government could explore monetizing some of these land assets, which critics argue may affect the project’s long-term viability.

Once it becomes a stakeholder, the state government cannot act unilaterally. So, the Central Government gave it a careful thought and came on board for the project.