This Article is From Sep 18, 2014

Hyderabad Metro Project Not Viable After Telangana, Says Developer

Hyderabad Metro Project Not Viable After Telangana, Says Developer

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Hyderabad: The Hyderabad Metro project has run into massive trouble, with its developer, L&T Metro Rail, threatening to walk out saying it is no longer viable after the division of Andhra Pradesh and the creation of a separate Telangana.

The company says the 16,000 crore rupee project should be taken over by the government of India's newest state born in June. (Also read: Hyderabad Metro Cost Escalates by Rs.2,500 Crore)

NDTV has accessed an eight-page letter in which the company presents a grim picture to the state government. ('Metro Man' Sreedharan Takes Part in Hyderabad Metro Train Test Run)

In the letter sent last week, the company says adverse economic conditions after the creation of Telangana, and the change in status of Hyderabad, have made it difficult to continue with the 71-km metro rail project. (Read: Hyderabad Metro Rail phase-I to be completed by 2014)

"The change in circumstances is having a material adverse effect on the project and shall continue to have such effect. The above facts are sufficient to excuse us of our obligation...," the company said in the letter titled "Project Takeover Proposal". (Also read: Hyderbad Metro Cost to Escalate Due to Re-Alignment)

Both L&T and the government have, however, denied any serious differences.

The state's ruling Telangana Rashtra Samiti has reportedly demanded changes in the project, and wants a realignment of routes. The company has reportedly been asked to build underground to accommodate the changes, which would escalate the costs.

Company sources say they have been taking a loss of Rs two crore a day and have equipment worth Rs 500 crore lying unused. There is a worry that the project cost has already increased by about Rs 3,000 crore.

In its letter, the company has warned that a project can serve public interest in the long run "only if the project is commercially viable to sustain an affordable metro rail transit system."

Sources in the Telangana government called the letter "corporate blackmail of the highest order."
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