Hyderabad metro cost escalation estimated to be Rs. 3,000 cr.

The Hyderabad metro rail is 'estimated to face a cost escalation of Rs. 2,500-3,000 crore', mainly on account of rising costs of borrowing for the initially estimated Rs. 14,132-crore project.

According to L&T Hyderabad Metro Rail Ltd. chief executive and managing director VB Gadgil, 'high interest rate on the loan amount is the single largest element' contributing to the cost escalation for the 72-km long elevated project.

L&T, the concessionaire for the project, however, is working out all options to minimise the impact of rising costs, including a proposed arrangement for swapping of debt for low-cost funds and also external commercial borrowings (ECBs), said Gadgil.

L&T recently indicated it was in advanced stage of talks with lenders for swapping debt worth Rs. 1,000 crore.

'We're confident of clinching a deal on this with the lenders (mainly banks) in the next 20 days,' Gadgil said, and added, the proposal was likely to be discussed in a meeting with the bankers tomorrow. At present, the cost of funds for the project stood at 12.5 per cent per annum.


BS