The project's debt serviced by public guarantees and past sops already doled out, they're playing the victim to extract a golden parachute. Why reward a firm that under delivered?

C L Rajam

In a move that reeks of corporate opportunism and potential political graft, infrastructure behemoth Larsen & Toubro (L&T) is twisting arms to bail out of the Hyderabad Metro Rail project, demanding a staggering Rs 6,000 crore exit compensation from the Telangana government.

If the Congress-led administration caves in, experts warn, the state could be saddled with a Rs 50,000 crore albatross over the next decades – a financial black hole that would crush taxpayers and expose the government to accusations of the biggest scam in Telangana's history. This isn't just a contractual dispute; it's a blueprint for how private greed can hijack public infrastructure, leaving ordinary citizens to foot the bill for elite bailouts.

The saga began over a decade ago, when L&T swooped in as the lowest bidder in 2010, clinching a 65-year public-private partnership (PPP) concession to build and operate the world's largest metro project of its kind. Valued at Rs 14,132 crore initially, the 72-km network across three corridors was touted as a transformative lifeline for Hyderabad's burgeoning urban sprawl.

L&T completed Phase I in 2020 at a ballooned cost of over Rs 20,000 crore, but six years into operations, the company is crying foul. Citing "heavy losses," mounting debt of Rs 13,000 crore, and a Rs 2,000 crore hole from recent years, L&T has formally offered to offload its 90% stake to the state or Centre via a new special purpose vehicle. But here's the kicker: they're not leaving empty-handed. The demand for Rs 6,000 crore in compensation positions L&T as the aggrieved party, when in reality, it's the state – and its people – staring down the barrel of catastrophe.

L&T's litany of excuses strains credulity. The company blames the Congress government's flagship Mahalakshmi scheme – free bus travel for women – for slashing metro ridership by shifting female commuters to overcrowded roads. Daily footfall, they claim, has plummeted from a peak of 5.63 lakh in August 2024 to under 4.5 lakh now, with revenue dipping 21% to Rs 1,108 crore in FY25 and losses widening 13% to Rs 626 crore. But where's the hard data? Neither L&T nor the government has released empirical studies quantifying the scheme's impact on metro usage. Ridership hovers around 4.75 lakh daily as of early 2025, a far cry from pre-COVID highs but hardly a death knell for a system designed for millions. This isn't rocket science; it's a classic bait-and-switch. L&T underbid aggressively to win the tender, ignoring risks like traffic underestimation and maintenance overruns. Now, with the project's debt serviced by public guarantees and past sops already doled out, they're playing the victim to extract a golden parachute.

The real scandal unfolds if Telangana bites. Taking over the metro means the government absorbs not just L&T's losses but the full operational burden for the remaining 55+ years of the concession. At current trajectories, that's a projected Rs 50,000 crore in maintenance, debt servicing, and expansions – a sum that could fund free education, healthcare, or irrigation for drought-hit farmers.

The irony? The same Mahalakshmi scheme L&T vilifies would balloon under state control, as the government foots both metro subsidies and bus giveaways. L&T's CFO R Shankar Raman called the free rides a ridership "disruptor" in May 2024, but Chief Minister A Revanth Reddy has vowed no retreat, even if it means scouting new private partners. Yet whispers in corridors suggest a softer line: weak contractual paperwork leaves Telangana vulnerable in litigation, with L&T's "pawns" – lobbyists and sympathetic officials – pulling strings for a sweetheart deal.

This isn't L&T's first rodeo. They've wriggled concessions before, citing low traffic and COVID shutdowns (a 169-day halt that gutted revenues). In 2023, they launched a "Save Your Metro" campaign after fare hike backlash, painting themselves as saviors. But the truth is uglier: L&T's own missteps, like quoting rock-bottom prices and operational glitches (including a bizarre "track mix-up" with Phase II alignments), Not utilising full real estate area assigned to L&T fueled the bleed.

If genuine lapses exist – say, delayed payments or policy shifts – arbitration is the civilized path. Form an expert panel with legal eagles to dissect the contract, extend targeted compensation  if warranted, and enforce penalties for breaches. Unilateral pre-closure? That's not resolution; it's robbery.

The political fallout could be nuclear. Opposition parties, from BRS to BJP, are already sharpening knives, primed to scream "kickbacks" from the rooftops. Imagine the headlines: Rs 6,000 crore "compensation" funneled back as election slush funds, letting L&T pocket savings on the Rs 50,000 crore they dodge. "The government gifted a mega-corporation an escape hatch for a fat cut," they'll howl, turning every fare hike or delay into proof of Congress corruption.

Telangana's fiscal sheet is already strained – post-bifurcation debts, farm loan waivers, and welfare promises – and this would be the match that ignites a taxpayer revolt. Why reward a firm that under delivered? Instead, flip the script: Serve L&T a notice demanding they cough up Rs 50,000 crore for the state's projected outlay if they bolt. Make them sweat the contract they inked.

L&T's gambit exposes the rot in India's PPP model. Hyderabad Metro was meant to be a poster child: seamless integration with MMTS trains, skywalks, and eco-friendly corridors easing the city's chokehold traffic. Today, it's a cautionary tale of how aggressive bidding meets real-world friction – pandemics, policy pivots, and plain bad math.

The company has sunk Rs 20,000 crore-plus, but that's on them; taxpayers didn't sign up to bail out boardroom blunders. As Phase II-A and II-B expansions loom (23 km to Medchal, 22 km to Shameerpet), L&T's refusal to partner leaves the state scrambling, potentially delaying lines through Old City and suburbs where 1,100 properties were already acquired at Rs 2,750 crore. Will L&T leave or pre close other projects in state, where they are getting projects?

Congress must harden its stance. No more sops; audit the books, invoke penalties, and rally public outrage. If L&T thinks Hyderabad's commuters are pawns in their profit game, they're wrong. This Rs 50,000 crore sword of Damocles hangs over every working-class family dodging potholes and buses. Let the exit happen on Telangana's terms – or watch a scam of epic proportions unfold, etching Revanth Reddy's name in infamy. Books of accounts and correspondence between L&T and Government should be declared open to public for scrutiny, to find out wrongs, what is asked by L&T and also whether the officials have gone soft in replying to L&T. Any  fault may result in future loss in the event of a legal fight. The clock's ticking; the people are watching.