India’s first public-private partnership (PPP) Metro rail project, Hyderabad Metro, is in the red. L&T Hyderabad Metro Rail Limited (L&THMRL), which operates the Metro, has sought government help to bail it out from the financial crisis.
Covid-19-induced restrictions coupled with lack of last mile connectivity, low ridership and increased operational cost have wiped out the gains the Metro operator made in the initial years of operation. The operator has been making Rs 5 crore loss a day, on an average, while its earnings are just Rs 1 crore a day.
In the last week of June, L&T Metro rail authorities had met chief minister K Chandrasekhar Rao and requested for help. The CM asked both Hyderabad Metro Rail (HMR) and chief minister’s office to submit a report on what could be done as per the concessionaire agreement.
Sources in the government said L&T submitted their financial details to the government. According to them, the Metro rail operator had registered Rs 400 crore loss alone in the first quarter (between April and June 2021) and is expected to touch Rs 1,500 crore by the end of the fiscal.
According to the report, accumulated losses since beginning of the operations had reached about Rs 4,000 crore. In the 2019- 2020, the accumulated losses were Rs1,766 crore, which was declared by L&THMRL in its annual report. Officials said the major reasons for losses were Covid-19 and subsequent lockdown during which the Metro services were suspended for several months.
Even after reopening services, the ridership (passengers availing Metro) was not encouraging as many companies, especially IT firms, had asked their employees to work from home. The other reason, according to the sources, was that many people have not been preferring Metro due to poor last mile connectivity.
There was criticism about the Metro fares too, which are much higher compared to other public transport like RTC buses. “Before Covid-19, the daily average ridership was 3.4 lakh and even it went to a peak of four lakh some days. There were no Metro services for 169 days. Even after Metro services resumed this year, the footfall was around two lakh in February 2021. Later, it fell to half and now has one lakh passengers a day,” a senior CMO official explained.
Official sources in municipal administration department said the CM might hold a meeting with L&THMRL officials on the issue and work out on a strategy to save it as Hyderabad Metro is the first public private partnership (PPP) Metro project in the country.