L&T gets 5 more years to finish Hyderabad metro rail project
The Andhra Pradesh government has given L&T Metro Rail, the Larsen & Toubro arm that is building the 71-km Hyderabad metro rail project, five years time to complete the project from Thursday, which was declared the 'appointed date'. <b>
This comes as a major relief to L&T, which is worried over delays in land acquisition and rights over certain key corridors, coupled with rising inflation and interest rates and commodity prices, all resulting in a cost escalation of Rs 1,468 crore already.
Despite delays from the government in handing over the land promised for the project, L&T went ahead by concluding the financial closure for the Rs 16,278 crore project in March 2011 and carrying out technical evaluation of bids from vendors of rolling stock and others. It worn the project in July 2010 in fresh bids called for by the AP government after scrapping the contract awarded to the Maytas Infra led consortium.
In a statement on Thursday evening, the state government said, "As per the concession agreement for the project, appointed date is crucial and the construction of the project will have to be completed within 5 years from this date."
Further, the government said, though financial closure was achieved 15 months back, L&T could not begin project works owing to non-handing over land. "On the assurance given by the government, L&T started construction activity from May this year but the appointed date could not be declared as government was to fulfil certain conditions."
The government, which has so far handed over some 244 acres of land, or 91% of the total land promised, assured that the balance land will be made available at the earliest and right of way for three metro rail corridors given in phases.
L&T Metro Rail is considering to seek state-level tax exemptions and reduction in duties to overcome cost escalation that emanated from delays from state government in handing over land, its chief executive and managing directorVivek B Gadgil told ET last December.
Apart from weighing the option of raising cheaper foreign currency loans, the company is also looking at renegotiating prices with vendors, localizing non-critical components, seeking supplier credit, deferring capital expenditure, executing project in phases and ploughing back revenues from early phases of operations.