Larsen & Toubro (L&T), India’s biggest engineering firm, may face difficulty in executing its biggest-ever build, operate and transfer project — Hyderabad Metro Rail — with issues like land acquisition for constructing key infrastructure and politics over protection of heritage structures along the road still remaining unresolved.
While residents of areas such as Sultanbazaar and Ameerpet are opposing change in the originally planned route, there are delays in acquiring land.
The residents are also up in arms over the possibility of the elevated track for metro resulting in dismantling of heritage structures built during the Nizam’s era.
According to sources, a key parcel of land required for building a depot on the outskirts of Hyderabad is still in the court, delaying a formal commissioning of works on the project. The company, however, has already begun some of the civil works, including soil testing, pending resolution of the issue.
“For now, it looks like there is going to be a delay in the project execution by few months. But that would not have any impact on the operation of the project by L&T since the delay would be adjusted in the concession period,” a source tracking the project said.
The over Rs16,000 crore, 71km, metro rail has been going through several hurdles ever since it was conceived.
“Though the elevated track goes through the median on the road, there is a need for constructing stations and other infrastructure. Additionally, real estate is a key component of the project, and the viability of the project is directly linked to the development of real estate attached to the metro infrastructure such as railway stations,” the source said.
For now, sources said, the land acquisition is halfway through and would take another three to six months to complete the process.
“It’s now extremely doubtful if the project would be commissioned in 2014 as per schedule. It might get delayed by at least 12 to 24 months,” the source said.
Meanwhile, L&T is also said to be doubtful of the viability of the project, particularly with the interest rates likely to add to the overall costs. The company was to raise about Rs11,000 crore from various banks towards debt, which is yet to be drawn. The loans carry a 10.5% rate, payable in about 15 years.
About Rs450 crore has already been spent on the project so far with the funding largely being internal.
The project was originally awarded to B Ramalinga Raju’s family-owned Maytas. With Maytas landing in trouble due to the accounting scam in Satyam Computer Services, the deal was scrapped and L&T won the project in a fresh round of bidding. The government was keen on laying a foundation stone for the project in January 2011. However, various issues including the separate Telangana movement and the objections raised by groups protecting heritage structures have been forcing formal start of construction in addition to the delays in acquiring the required land along the proposed route.
Comments