Hyderabad: 21 June, Posted 6:51 PM IST
A fresh dispute has emerged between the Telangana government and the Centre over funding arrangements for the Hyderabad Metro Rail project. The issue relates to the refinancing of the first phase of the metro and could potentially affect future expansion plans. Officials say the delay in releasing funds has created uncertainty regarding the financial restructuring of the metro project.
The Telangana government had initiated efforts to refinance approximately ₹13,527 crore as part of the process of taking over the Phase-1 metro project. According to officials, the state has already paid its contribution and processing charges connected with the proposed financial arrangement.
Despite completing legal and procedural requirements, including regulatory approvals, the expected release of funds has reportedly not taken place. State government officials have questioned why conditions being applied to Hyderabad Metro were not imposed on several metro projects in other states.
According to officials, Indian Railway Finance Corporation has extended financial assistance to several metro projects across the country. However, Telangana leaders allege that additional conditions have been imposed specifically in the Hyderabad Metro case. One of the major points of disagreement concerns the escrow account mechanism.
Under the proposed arrangement, metro revenues would be deposited into a designated account from which loan repayments and operational expenses would be managed. The state government argues that the arrangement it proposed is similar to agreements adopted elsewhere and believes that the issue can be resolved through discussions.
The Centre, however, has maintained that the matter is technical rather than political. According to the central position, metro maintenance expenses should receive priority before loan repayments to ensure long-term operational sustainability. Union Minister G. Kishan Reddy has reportedly stated that maintenance requirements should be adequately protected to avoid operational difficulties in the future.
State officials argue that even if revenues decline, the government would continue to bear financial responsibilities and therefore the proposed repayment structure should not create concern. The Telangana government is expected to hold further discussions with central authorities in an attempt to secure approval for the financing proposal.
If approval is not granted, officials indicate that alternative funding options, including private banks and other financial institutions, may be explored. However, borrowing from private institutions could involve significantly higher interest rates.
Could affect proposed Phase-2 project of Metro
Officials are also concerned that prolonged delays could affect the proposed Phase-2 expansion project. The Phase-2 metro expansion is estimated to involve substantial investment, with funding expected from state resources, external financial institutions and borrowing arrangements.
The state government is reportedly examining alternative models that would allow the expansion to proceed even if central participation remains limited.As discussions continue, both governments maintain different positions on the issue. The outcome of the negotiations could play an important role in determining the future pace of Hyderabad Metro expansion.
Mohammed Naseer Giyas is a multi-media and bilingual journalist with over 20 years of experience across print, digital, and television media. Founder of Raftaar-e-Deccan, he is an alumnus of IVLP, Thomson Reuters Foundation, and ICFJ, and has worked with leading English and Urdu news organisations.
