L&T Hyderabad Metro Rail Limited may invoke force majeure clause with the Telangana government seeking extension of the concession period equivalent to the time it could not operate due to the lockdown, the company said in its latest annual report.
The concession period of the project is 35 years, from the appointed date of July 5, 2012 including the initial construction period of five years.
This is extendable for a further period of 25 years, subject to fulfilment of certain conditions by the SPV (special purpose vehicle) as set out in the concession agreement.
The L&T Metro Rail (Hyderabad) said it has already submitted project cost overrun details to the state government for ₹ 3,756 crore and “has been pursuing the matter with the government for providing relief.”
The original cost at the time of conception was ₹16,375 crore which has now crossed ₹20,000 crore.
Metro Rail operations in the city came to a standstill from March 22 due to the lockdown announced by the Centre to contain the spread of coronavirus.
“…However, the company is protected by the force majeure clauses of the Concession Agreement to claim extension of concession period equal in length to the period during which the Concessionaire was prevented from collection of Fare and reimbursement of force majeure costs. The management of the company will study the impact and will lodge appropriate claims within reasonable time once the operations are resumed,” it said the annual report.
Hyderabad and Mumbai are the only two cities in the country where Metro Rail is operated by private players under PPP (public-private partnership) mode and hence the resumption of operations is essential for the healthy survival of the concessionaire, an expert of the public transport said.
The company’s revenues from operations and other income for the 2019-20 stood at ₹598.20 crore (including fare and non-fare revenue) as against ₹318.46 crore for the previous financial year.
The loss before tax and after tax were ₹382.21 crore for the financial year under review as against loss before and after tax of ₹147.32 crore and ₹148.15 crore respectively for the previous financial year.
The Concession Agreement includes construction of 71. 16 km of elevated metro rail corridor and rights for real estate development of 18.5 million sq.ft., with strategically located land parcels interspersed in prime city locations adjoining metro stations and metro corridors.
During an interaction with netizens through Twitter, Telangana Minister KT Rama Rao on Sunday said “We are waiting for the nod from Govt of India” on the resumption of metro rail services in the city.”