L&T bags Metro Rail for Rs 12,132cr

Engineering and construction major Larsen and Toubro has bagged the Rs 12,132-crore Hyderabad Metro Rail project by seeking the lowest viability gap fund from the state.

This is double relief for the government since the jinxed project is finally taking off and that too without additional financial burden on the state coffers.

The Centre had agreed to provide a VGF of Rs 2,362 crore for the project and it was felt that the state may have to provide additional VGF of Rs 1,491 crore.

The L&T, however, sought a VGF of Rs 1,458 crore and outwitted the two rivals, the Anil Dirubhai Ambani Group and a consortium of Russian and Chinese companies, in the financial bid which was held on Wednesday.

The Transstroy-OJSC (Russia), CR 18 (China), BEML Consortium sought a VGF of Rs 2,200 crore and ADAG sought Rs 2,991 crore. Further, L&T also agreed to give revenue share to the state from 21st year of operations starting from 0.5 per cent.

The project will be implemented under the Design, Build, Finance, Operate and Transfer mode and the concession period for L&T is 35 years which can be extended by another 25 years.

VGF is a one-time grant from the Centre and reduces the financial burden of the project to some extent. Unlike in the past where the operator was selected on the basis of the revenue share that will be given to the government, this time the bids were decided on the amount of grant it sought from the state.

The HMRL will give Letter of Appointment to L&T in a month after obtaining the formal approval from the state Cabinet. State officials are hopeful that the company would achieve financial closure by December and launch the project in January 2011.

“As L&T quoted an amount which is less than the VGF to be provided by the Centre, the state need not give it grant,: a senior official pointed out.

The much-talked-about Hyderabad Metro Rail got delayed after the state cancelled the agreement with scam hit Maytas which had promised to give Rs 30,000 crore to the government during the concession period. HMR had to postpone the fresh bids several times and the Telangana movement also cast a shadow on the project.

“We are greatly relieved because the new concessionaire is a strong player and has reputation of completing projects in time,” a state official said.

While six companies or consortia were short-listed, two of them, GMR and GVK, did not submit financial bids and Soma-led consortium sought extension of time to submit the financial bids leaving the field to L&T, ADAG and Transstroy consortium.