Hyderabad: The Cabinet sub-committee examining the takeover of Hyderabad Metro Rail phase-1 from Larsen & Toubro (L&T) has estimated that the state government will incur an expenditure of about Rs 470 crore towards operations and maintenance (O&M) over the next five years, alongside a capital outlay of Rs 560 crore for rolling stock, signalling systems, track infrastructure, traction motors and electrical works, official sources said.
At its meeting on February 23, the state Cabinet had approved the takeover of Metro phase-1 from L&T by March 31, marking the end of the current financial year 2025–26.
The Cabinet sub-committee reviewed a technical assessment report prepared by Delhi Metro International Limited (DMIL), which concluded that the Hyderabad Metro Rail phase-1 system, currently operated by L&T, is technically sound and compliant with modern metro rail standards. Hyderabad Metro Rail Corporation Limited (HMRCL) had appointed DMIL to conduct an independent evaluation of the technical aspects of the proposed acquisition.
According to sources, a draft report containing detailed technical specifications and findings was submitted to the Sub-Committee and subsequently placed before the Cabinet during its February 23 meeting, where approval was granted for the takeover.
The report noted that several subsystems of the metro network are nearing the end of their service life and will require replacement or major overhauls within the next five years to ensure continued safe and efficient operations. It also highlighted that the existing O&M contract with Keolis Hyderabad Mass Rapid Transit System Pvt. Ltd (KHMRTS) will expire on November 27 this year, necessitating immediate decisions on renewal or alternative arrangements. The government has decided to extend the Keolis contract for one year as an interim measure.
KHMRTS, a subsidiary of the global Keolis Group, is the official operator of Hyderabad Metro Rail, one of India’s most advanced urban transit systems.
Financial projections in the report estimate O&M expenditure at Rs 470.47 crore over five years, while capital investments for inspections, procurement of new systems and overhauling ageing infrastructure are expected to reach Rs 560.52 crore during the same period.
The market value of Metro assets has been estimated at Rs 19,136 crore under Right-to-Use (RTU) valuation and Rs 22,102 crore under freehold valuation, with leased assets categorised as RTU and non-leased assets treated as freehold.
The valuation exercise indicated that intangible assets of the phase-1 Hyderabad Metro Rail system, including the 69.2-km network, trains and associated systems, stood at Rs 14,545 crore as of December 2025, while outstanding loans totalled Rs 12,965 crore. Of the 269 acres of land originally allocated for the Metro project, about 82.65 acres not mortgaged or leased by L&T to secure loans will be taken over by the state government as part of the acquisition process.
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