IRFC signs Rs 13,527 cr refinancing deal for Hyderabad Metro to support expansion and cut debt costs
New Delhi, May 25
Indian Railway Finance Corporation Ltd. on Monday signed a Rs 13,527 crore term loan agreement with L&T Metro Rail Limited to refinance the debt obligations of the Hyderabad Metro Rail project, in a move aimed at strengthening the project's financial sustainability and supporting future metro expansion in the city.
The refinancing comes after the transfer of 100 per cent ownership of L&TMRHL from Larsen & Toubro Limited to the Government of Telangana through Hyderabad Metro Rail Limited (HMRL), converting the metro network into a state-owned public mobility asset and creating a stronger financial framework for expansion plans.
The agreement was signed in the presence of IRFC CMD and CEO Manoj Kumar Dubey and Telangana Chief Secretary K. Ramakrishna Rao.
The refinancing facility will replace higher-cost debt with competitively priced long-term rupee financing over a 20-year tenure with quarterly repayments. The loan will refinance existing debt obligations, including non-convertible debentures (NCDs), commercial papers and term loans.
The transaction is expected to help existing lenders make an orderly exit while improving the long-term financial position of the Hyderabad Metro project.
Hyderabad Metro Rail Phase-I spans 69.2 kilometres across three corridors with 57 stations and is among the world's largest metro rail projects developed under the public-private partnership (PPP) model. The network currently handles more than five lakh passenger journeys daily.
The refinancing is also expected to support the Government of Telangana's plans to expand the metro network into new corridors and improve last-mile connectivity across Hyderabad's metropolitan region.
IRFC said the financing structure includes no processing fees, commitment charges or prepayment penalties. The facility is backed by a credit enhancement framework that includes an unconditional undertaking by the Government of Telangana for servicing dues payable to IRFC, a state government guarantee and an RBI-backed direct debit mandate.
IRFC CMD and CEO Manoj Kumar Dubey said the transaction demonstrates the corporation's ability to provide "innovative, long-tenor financing solutions" for large infrastructure projects and reflects its growing role beyond conventional railway financing.
IRFC said the transaction also creates a replicable financing framework for urban transit systems across India as investments in sustainable urban mobility infrastructure increase.
— ANI
Reader Comments
Finally some sensible financial engineering for metro projects. These PPP models were bleeding the private developers dry. Government taking ownership and refinancing at lower rates is a win-win. But I hope the state doesn't end up subsidizing operational losses forever. Need to see the actual repayment schedule and how they plan to keep ridership growing.
Interesting to see IRFC doing non-railway financing. They're diversifying beyond just funding Indian Railways' rolling stock. The 20-year tenure with quarterly repayments and no prepayment penalty is a solid structure. But why no mention of interest rate? I hope it's significantly lower than what L&T was paying on those NCDs and commercial papers.
As a daily Hyderabad Metro user, this is welcome news. The service is generally good but the financial health of the project was always a concern. Government backing gives me confidence that fares won't skyrocket and expansion will actually happen. Please extend to the IT corridor towards Gachibowli and Hi-Tech City more seamlessly! 🚉
It's encouraging to see Indian states using innovative financing for urban transit. The credit enhancement from the state government and RBI-backed direct debit mandate makes this a very secure investment. This model could definitely be replicated for other metro projects in India. Just hope the political will remains consistent for the full 20-year period.
Rs 13,527 crore is a huge sum! While refinancing is smart, we need to ensure the metro remains affordable for common people. Fares in Hyderabad are already on the higher side compared to Delhi Metro. Also, the Rs
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