Business News
Hyderabad metro shows why development infrastructure should not be mixed up with politics
The Hyderabad Metro Rail, the country’s first elevated metro rail on PPP (private public partnership) is finally ready to chug after a roller–coaster ride of a decade. “It will not only change travel patterns but also behavioural patterns of people in the Nizam’s town,” said NVS Reddy, MD of HMRL, as it gets ready for launch on 28 November.
This comes as a great relief for the core management team of L&T MRH, its chairman SN Subramanyam and MD Shivanand Nimbargi who, over almost a decade, went through several ups and downs caused by successive political interventions, social activism leading to delays, PILs and cost hikes. “Thank God, we are rolling finally,” said a representative of the L&T MRH, which is the concessionaire, spending almost 90% of the project cost of Rs 16,375 crore at Rs 13,000 crore.
The L&T MRH, which is implementing the project with Hyderabad Metro Rail (HMR) (a Telangana government entity) and the Government of India, enjoys the concession for 35 years. The company laments that it has already lost two years since the appointment date of June 2012 set during Congress Chief Minister Kiran Kumar Reddy as the real work picked up only after the formation of Telangana in 2014. Even after resolving the issue of diversion and re-routing with the current Telangana Rashtra Samiti (TRS) government, they have been able to complete only 30 km of the 72 km route for which they originally inked the PPP deal and need an extension of 2 more years.
The TRS Roadblock
The scene changed in 2014 after the TRS government took over the reins of the project and its Chief Minister K Chandrasekhar Rao declared that Hyderabad would have a 200 km metro and that it would not be allowed to pass over historic locations like the Assembly and Sultan Bazaar. As if on cue, its political ally MIM also raised its voice against the Metro crisscrossing 12 historical locations in the Old City and sought realignment of the route.
“The letter seeking termination of the project was wrongly highlighted by the newspapers, it was only a “gesture” and not final,” said VB Gadgil, Chief Executive of L&T Hyderabad Metro Rail in a media interaction in September.L&T group chairman AM Naik wrote several detailed letters to KCR in a bid to resolve the issues and also called for caution about the legal aspect. The letter of February 2017 was part of a huge correspondence with the government to resolve challenges in execution of the project. The letter of Naik sought to relieve L&T from the project as there were “unusual” terms from the Telangana government and adverse economic conditions contributed to unforeseen cost escalation which made the project incapable of performance.
L&T had allegedly lashed out at the government interference and delay in finalisation of routes and corridors. Politically, the Centre which had put in 10% of the cost at Rs 1458 crore was also wary of the Telangana government’s unsteady approach. It is alleged that the Centre finally cautioned that such an unclear approach by the Telangana government would only cause setbacks to other projects and subsequent central support cum guarantees. “We kept mum and Telangana finally saw the light, and GoI intervention also helped,” said a spokesman of the L&T HMR requesting anonymity.
The issue was discussed at a cabinet meet and finally the CMO which had initially leaked the letter of the ‘L&T threat to walk out’ worked out a compromise and dropped its demand for realignment and re-routing and asked the concessionaire to complete the project as scheduled. But the builder had lost two precious years already and the Telangana government kept dismissing L&T’s demand for an extension of the deadline by a year or two, insisting instead on completion of at least the first phase by hook or crook. “We wanted to showcase the Metro during the Global summit at Hyderabad,” said the CM who also holds the industry portfolio.
The Metro Rail, Outer Ring Road and PV Expressway were part of the ‘Vision 2020’ document released by the Chandrababu Naidu government as urban infrastructure initiatives to support the IT explosion that began in early 2000. The Naidu government had done its homework on land acquisition from Wakf and endowment departments for development, and also the estimated Metro Rail cost at around Rs 10,000 crore. But his successor, YS Rajashekhara Reddy, with his focus on welfare schemes, put the Metro project in cold storage. After his 2008 electoral victory for a second innings, YSR finally brought the Metro Rail project out for bids.
The first bids of the PPP project took place in 2008 and was awarded to the consortium of Maytas, a wing of Satyam group. This was cancelled after the unraveling of the massive Satyam scam involving its founder Ramalinga Raju and the failure of Maytas to raise funds. YSR died in a chopper crash the following year and the Metro Rail project was back in cold storage in the political anarchy that followed.
The last Congress Chief Minister of undivided Andhra Pradesh N Kiran Kumar Reddy relaunched the process and awarded it to L&T in 2010 for Rs 12,132 crore and after preparatory work the launch date was set as June 2012 with a deadline for 2017 to complete the project. The Telangana agitation then intensified and work was hit once again. When the project was finally flagged off in 2014, after the creation of the new Telangana state, the government wanted the project to be completed in three years.
At present there are over 200 court cases including 12 public interest litigations (some of them filed by TRS supporters in 2010 protesting against Wakf land acquisitions for Metro) pending against the Hyderabad Metro Rail. The officials of HMRL and L&T claim that work is gathering pace and the project would be fully operational by December 2018 for the 72 km stretch of initial bidding.
If the government is keen to take up other corridors, the project will have to go back to the negotiation table with the concessionaire.
The L&T MRH is ready to roll out six car trains with capacity to carry 2000 passengers at a frequency of 15 minutes each on its 24 stations between Miyapur-Ameerpet-Nagole, the maiden corridor being unveiled on November 28. It also has plans to install over 670 escalators at a cost of Rs 400 crore. The Telangana government has also invited Ivanka Trump for a journey with the Prime Minister, but US government officials have not approved it yet.
As per the projections of L&T and HMRL the travel time is 45 minutes on Corridor 1 from Miyapur–L B Nagar (29 km) as against 144 minutes by road, 22 minutes for Corridor 2 from Jubilee Hills to Falaknuma (15 km) as against 140 minutes by road and 39 minutes for Corridor 3 (28 km) from 126 minutes on road.
In September last year, Congress leaders went to visit the works, but were stopped by the police on the directions of Metro officials and the government. Leader of Opposition in Telangana legislative council Mohammed Ali Shabbir says that the delay was deliberately caused by the TRS-MIM combine for political gains in the Hyderabad civic polls of 2016 by influencing Muslims voters of old city. “Both TRS and MIM played to the gallery as protectors of Hyderbad heritage and put roadblocks in L&T works,” he charged.
Shabbir has sought PM Narendra Modi’s intervention at the Metro inaugural to assure that the Old City circuit of 5.5 km from Imliban to Falaknuma would be completed at the earliest in the interests of the development and progress of Muslim community. “The political elements of MIM, who are scared of their (Muslims) growth and empowerment of youth and women in Old City, are opposing the Metro,” he added.
The Congress has also charged the TRS and MIM combine as responsible for the hike in project cost by a whopping Rs 4000 crore as a result of their political dillydallying. “Now the people of Hyderabad who have already gone through hell due to the traffic jams during the construction of Metro rail have to bear the brunt of high tariffs,” he said.
L&T HMR now seeks a further extension of the deadline by a year or two along with the concession so that they can reap the benefits of their huge investments in the PPP. They have already projected the revenue as 40% from passenger tariff, 50% from malls and shops at Metro stations and only 10% from advertisements over 30 years i.e. till 2047. “As of now L&T has invested 90% of the project cost at Rs 13,000 crore and may have to put in more for the final stage,” said an L&T spokesman.
The government of Telangana pitched in a mere Rs 300 crore towards land cost and the GoI is picking up 10% at Rs 1458 crore. “As on date, we have put in Rs 9,000 crore which includes Rs 2700 crore equity, Rs 600 crore from VGF and the rest is debt,” said J Ravikumar, Chief Financial Officer of L&T MRHL.
The ball is also in the Telangana government’s court now as L&T has made it conditional for extension of both deadline for construction and also the concession. The concession is for 35 years, including 5 years of construction period, which ended in June 2017. Only 30 kilometres have been completed in the scheduled 72 km and 42 km of construction activity remains, of which nearly 78% of works are already complete. “The developer has requested the government for extension of schedule for a year or two and it is under consideration of the Chief Minister K Chandrasekhar Rao,” said Chief Secretary SP Singh.
But there is not enough light at the end of the tunnel. L&T will have a tough task in building the Old City corridor of Metro Rail. As many as 145 heritage structures including 15 listed heritage structures have been identified, though the builders contend that it will pass through only nine heritage structures. The convener of ‘Forum for Better Hyderabad’ Veda Kumar who has filed a PIL on the issue wants the L&T and HMR to dig tunnels as in Delhi and Bengaluru to protect heritage townships and monuments instead of overhead tracks. “The tunnel will cost Rs 600-700 crore per km,” say the builders.
As the future of the Metro Rail in the 400-year-old ramparts of Hyderabad city still hangs in confusion, the project shows why politics of development, votes and heritage should not be mixed up
