Hyderabad Metro Takeover Explained: Why Phase-II Is Stuck Despite Telangana's ₹15,000 Crore Move

[00:00:00]How do we measure our quality of life in Hyderabad? Topmost in the list is the time we spend on our daily commute.

[00:00:07]I spent 2 hours just to go to office and come back. My child is forced to spend 3 hours just for the commute. These complaints are common. And to solve this problem, the only solution is a reduction of congestion on roads, and public transport is the only solution for this. We know how effective is our bus transport in Hyderabad, and the government had come up with a solution that is called the mass rapid transport called the Hyderabad Metro Rail. And now, the Hyderabad Metro Rail is embroiled in a controversy. Let's take a look at the Hyderabad Metro Rail issue in a 360° view.

[00:00:49]Hello and welcome. You are watching Telangana Today, and this is Srinivas Reddy. The Hyderabad Metro Phase 1 is now officially under the ownership of Telangana government. But even after completing the takeover, the future of the project remains uncertain because of a major funding stalemate. While the government has secured refinancing support for the project, delays in the release of funds have triggered a political controversy between the state and the center. Until the financial transaction is fully completed, Larsen & Toubro, or L&T, will continue operating the Hyderabad Metro as of now. The takeover itself was based on recommendations made by a cabinet sub-committee on April 10, 2026, which were subsequently approved by the state government. So, what exactly has happened? Why is the funding delayed?

[00:01:40]And how does it impact Hyderabad Metro Phase 2?

[00:01:44]Let's break it down now. The Telangana government has formally acquired 100% equity stake in Hyderabad Metro Rail Phase 1 from L&T on April 25th, 2026.

[00:01:57]A few days later, on April 29th, Hyderabad Metro Rail Limited signed a share purchase agreement with L&T Metro Rail Hyderabad. Under this agreement, the state acquired 100% equity shares for a value of 1,461.47 crore. With this transaction, the entire 69.2 km Hyderabad Metro Phase 1 corridor became a state-owned entity. However, the acquisition involved much more than buying the shares. The Telangana government also decided to refinance L&T's outstanding debt, approximately 13,615 crore, through Indian Railway Finance Corporation, or the IRFC. Following this takeover, the government assumed full control of Hyderabad Metro operations and appointed a new board of to oversee the system. To facilitate the refinancing, Telangana has secured the support of up to 13,600 crore from the IRFC. An agreement for this refinancing package was also signed in New Delhi on May 25, 2026.

[00:03:07]This package carries a repayment tenure of 20 years with the quarterly repayments. While the takeover is complete on the paper, the biggest challenge now is the delayed release of this refinancing funds. The IRFC was expected to release the loan by June 15th, but the funds have not yet been released so far. This delay has triggered a political confrontation. Chief Minister A. Revanth Reddy has accused Union Minister G. Kishan Reddy of creating hurdles and influencing the Union government to hold back the release of funds. The Chief Minister warned that if the IRFC doesn't release the funds, Telangana may be forced to approach other financial institutions for refinancing the support. However, this option could prove cumbersome and potentially increase the state's financial burden. The Chief Minister also claimed that the IRFC had approved the financing package at an interest rate of 4%. So, with the finance not coming, what will happen to HMR? What will happen? Who will operate that is the biggest doubt. However, despite this ongoing stalemate, officials say that L&T will continue to operating Hyderabad Metro until the financial transition is fully completed. So far, so good. And the charge of Revanth Reddy elicited a quick response from Union Minister Kishan Reddy. He denied all the allegations. According to him, the delay is due to technical reasons rather than political interference. He argues that the government wanted loan repayments to be prioritized using the revenue earned by Hyderabad Metro. This position has raised questions because metro rail corporations elsewhere in the country do not generally prioritize debt payment or operational and maintenance requirements.

[00:05:01]The argument from the state government is that metro revenue should be first utilized for debt repayment obligations and then only the OM, that is operations and maintenance, will come. Many observers believe that these issues related to phase one refinancing loan and central state cooperation on metro phase two should be resolved through dialogue rather than public criticism.

[00:05:26]As the dispute intensified, Chief Minister Revanth Reddy shot off an open letter to Union Minister Kishan Reddy.

[00:05:34]In the letter, he urged the Union Minister to facilitate a meeting with the Union Railway Minister and secure all necessary approvals for the phase two of the Hyderabad Metro.

[00:05:46]The Chief Minister's argument is that refinancing through IRFC would provide a longer repayment tenure and significantly lower interest rates.

[00:05:56]He also pointed out that the state government had already paid an upfront fee of 84.32 crore for the release of first tranche of financing.

[00:06:07]Additionally, the government had also deposited 1,461 crore towards the equity component of the transaction into an escrow account. And now let us see why is the second phase become so important in this story. Telangana has already requested the center to sanction a metro phase two as a 50/50 joint venture.

[00:06:29]However, the government says that if approvals are delayed, it is prepared to execute the project through its own resources and institutional arrangements, which is a doubtful issue.

[00:06:41]Because This is significant because the government has already acknowledged financial challenges in implementing welfare and developmental programs in the state. Official figures state that Telangana earns about 18,500 crore every month. Out of this, nearly 6,500 crore go towards the salaries and pensions of the government employees.

[00:07:05]Another 6,500 crore is spent on loan repayments and interest payments. This leaves just about 5,500 crore for welfare and other developmental activities. If this is the situation, can the government take up the phase two on its own? The proposed metro phase two comprises seven corridors spanning 122.9 km at an estimated cost of 38,595 crore. One of the mandatory requirements for taking up this phase two is the seamless integration between the privately operated phase one network and the proposed expansion network. The problem is that until the phase one takeover process is fully completed, the proposed phase two project cannot move forward smoothly. Although Telangana has proposed a 50-50 partnership with the center, if the center declines, the state would have to bear the entire cost on its own. Another major challenge would be securing loans at an interest rate of around 4%. The previous BRS government executed the executed the metro project when the cost of construction was around 230 crore per kilometer.

[00:08:17]Today, this figure has risen to nearly 320 crore per kilometer. That means that much the cost has escalated. Now, let us see. We have discussed various issues pertaining to the metro. Now, let's take a look at what exactly is the metro.

[00:08:33]Hyderabad metro phase one began operations on November 29, 2017. The network covers three corridors spanning 69.2 kilometers, and was built at a cost of approximately 22,000 crore. Corridor one is the red line connecting Miyapur to LB Nagar across 29 kilometers.

[00:08:55]Corridor two is the green line connecting JBS, Jubilee Bus Station, to MGBS in Gowliguda across 16 kilometers.

[00:09:04]Corridor three is the blue line connecting Nagole to Raidurg across 27 kilometers.

[00:09:12]Everyday, Hyderabad metro covers nearly 25,600 kilometers through its services.

[00:09:19]The network has about 57 stations, and it serves approximately a mind-boggling 5.5 lakh passengers everyday. Now, let's come to the phase two details. Phase two is divided into phase two A and phase two B.

[00:09:33]Phase two A proposes five corridors covering 76.4 km at an estimated cost of 24,269 crore.

[00:09:44]The project has been proposed as a joint venture between the Union government supported through a public-private partnership model and funding from the agencies like Japan International Cooperation Agency JICA or Asian Development Bank or the ADB and other institutions. The proposed corridors include Nagole to Shamshabad Airport 36.8 km, Raidurgam to Kokapet Neopolis at a distance of 11.6 km, MGBS to Chandrayangutta at a distance of 7.5 km, Miyapur to Patancheru 13 13.4 km, and LB Nagar to Hayathnagar 7.1 km. Then comes the phase B.

[00:10:30]On June 21, 2025, Telangana has submitted its proposal for Metro phase 2B. The estimated cost of this project, the 2B, is 19,579 crore. The proposed funding pattern includes Telangana government's share of 5,872 crore or 30% Central government share of 3,524 crore or 18% debt from international financial institutions to the tune of 9,398 crore or roughly working out to 48% and a public-private partnership component of 783 crore, roughly about 4%. This project includes three major corridors. This is the project 2B.

[00:11:17]That is from Rajiv Gandhi International Airport in Shamshabad to Bharat Future City covering 39.6 km at a cost of 7,168 crore. JBS Jubilee Bus Station to Medchal covering 24.5 km at a cost of 6,946 crore and JBS to Shah Beer Bait covering 22 kilometers at a cost of 5,465 crore. And now questions are being raised about whether Telangana can realistically fund the massive metro phase two expansion on its own or if central support doesn't materialize. BRS leaders have demanded a greater transparency in the entire transaction and have even sought a judicial probe into takeover process and financial agreements. For now, Hyderabad metro phase one is officially under the state ownership, but until the refinancing funds are released and the debt transfer is completed, uncertainty remains. And the future of Hyderabad's ambitious metro expansion may depend on how quickly the center and the state can resolve their differences. Will Telangana build metro phase two alone?

[00:12:31]Tell us in the comments and don't forget to subscribe to Telangana Today for more Hyderabad updates. Thank you.