Telangana Government Moves to Appoint Second Consultant for Hyderabad Metro Phase-I Takeover
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Hyderabad: The Telangana government and its special purpose vehicle, Hyderabad Metro Rail (HMR) Limited, are preparing to appoint a second transaction consultant to support the takeover of Phase-I management and operations of the Hyderabad Metro Rail from L&T Metro Rail Hyderabad (L&TMRH). The additional consultant will specifically handle the technical due diligence of the project, a step officials say is crucial to ensure a smooth transition of one of India’s largest metro rail public-private partnership projects.
The move comes after authorities realised that the agencies shortlisted to examine the financial and legal aspects of the project lacked the technical expertise required to assess complex metro rail systems.
Policy Overview: Why a Second Consultant Is Needed
Phase-I of the Hyderabad Metro Rail spans 69.2 km across three corridors and involves sophisticated infrastructure, including modern rolling stock, advanced signalling systems and integrated operations control mechanisms. While the state government has already appointed a consultant for a “non-technical sovereign audit,” officials acknowledged that technical evaluation demands specialised knowledge in metro rail and railway technologies.
During the tender finalisation process for the first consultant—eventually awarded to IDBI Capital—it became clear that none of the shortlisted agencies, including SBI Caps and PNB, had the capability to assess technological components. This gap prompted the decision to appoint a separate consultant exclusively for technical due diligence.
According to official sources, the technical audit will focus on systems such as rolling stock condition, electric traction, communications-based train control (CBTC) signalling, operations control centres, and maintenance practices.
Key Features of the Technical Due Diligence
The second consultant’s mandate will include a comprehensive evaluation of the metro’s physical and digital assets. Officials said the consultant must have proven expertise in metro rail operations and railway technology, with the ability to assess long-term reliability, safety standards and upgrade requirements.
Public sector entities such as Delhi Metro Rail Corporation (DMRC), RITES, and the National Capital Region Transport Corporation (NCRTC) are among the organisations likely to be considered if preference is given to government-linked firms. However, officials have not ruled out engaging overseas consultants with global metro rail experience.
The technical audit is expected to complement the financial and legal scrutiny already underway, ensuring that the state government has a complete picture of the project before assuming control.
Impact Analysis: Timelines, Finances and Legal Risks
The Chief Secretary-led panel overseeing the takeover has been tasked with completing scrutiny of Phase-I within 100 days, aligning with the Chief Minister’s deadline to take control before the start of the next financial year. However, senior officials caution that a detailed and credible audit—especially one involving technical systems—could take four to five months.
“There are numerous short- and long-term contracts of L&TMRH that the consultant agencies must examine to ensure these do not become legal bottlenecks later,” a senior official said. These contracts cover operations, maintenance, technology suppliers and commercial arrangements, all of which could have financial and legal implications post-takeover.
From a financial standpoint, one non-negotiable element is the ₹15,000 crore payment, which includes the debt component agreed upon between L&T and the state government three months ago. This amount must be settled before Telangana formally assumes control of Phase-I.
Broader Context: Why the State Is Taking Over
The Telangana government was compelled to buy out Phase-I from concessionaire L&TMRH after the latter declined to integrate the existing network with the proposed Phase-II (2A) expansion. Phase-II involves a 76.4 km expansion across five corridors, with an estimated cost of ₹24,269 crore.
The Centre had insisted on integration of Phase-I and Phase-II to ensure passenger convenience and to enable the formation of a joint venture with the state government. Such a structure would allow the project to access funding from international agencies at lower interest rates.
Officials said L&TMRH’s refusal to participate in the integrated model left the state with limited options, ultimately leading to the decision to take over Phase-I operations.
Future Outlook: Monetisation and Expansion Plans
Looking ahead, the state government is exploring multiple strategies to manage the financial burden of the takeover and future expansion. One proposal under consideration is the monetisation of nearly 200 acres of land associated with the metro project. This includes commercial development and revenue generation from assets such as the four malls developed by L&TMRH.
Urban transport experts note that a thorough technical audit will be critical not just for the takeover, but also for long-term planning, including network expansion, fare integration, safety upgrades and operational efficiency.
As Telangana pushes to bring Hyderabad Metro fully under public control, the success of the transition will depend on the depth of due diligence and the ability to align technical, financial and legal frameworks.
Our Final Thoughts
The Telangana government’s decision to appoint a second consultant reflects a pragmatic recognition of the complexities involved in taking over a large-scale urban transport system. Hyderabad Metro Phase-I is not merely a financial asset but a technologically intensive public utility that millions depend on daily. A rigorous technical audit is essential to avoid future safety risks, operational inefficiencies or legal disputes. While the 100-day deadline signals political urgency, the government must balance speed with thoroughness. If executed carefully, the takeover could pave the way for a more integrated, passenger-friendly metro system and unlock long-term value through expansion and asset monetisation. The coming months will be critical in determining whether Telangana can turn this transition into a model for sustainable urban mobility.