The long wait for the Hyderabad Metro Rail (HMR) expansion has stretched further, with the Centre and the Telangana government deciding to have SBI Capital Markets (SBI Caps) to undertake a fresh valuation of Phase I and examine plans for an expanded network of up to seven corridors spanning 122 km for Phase II.

The move has raised more questions than answers. Notably, there is no clarity on the pending loan disbursal of ₹13,527 crore from the Indian Railway Finance Corporation (IRFC), despite an agreement being signed with the State government last month or timeline for SBI Caps to submit its report, point out informed sources.

Earlier reports indicated differences between the Ministry of Railways and the Ministry of Housing and Urban Affairs over issuing a ‘No Objection Certificate’ (NOC), which appears to have stalled the loan. This comes even as the IRFC CEO had publicly stated that the corporation was encouraged to fund metro rail projects following its ‘Navratna’ status. He had maintained that HMR Phase I is ‘operationally profitable’ and that the proposed loan could reduce financing costs by about 40% to the government.

With officials concerned tight-lipped, there is no clarity on whether any conditions attached to the IRFC loan were overlooked by L&T or the State government at the time of signing the agreement. “It is also possible that prior approvals were not obtained or the appropriate authorities at the Centre were not kept in the loop, leading to the current situation”, said the sources, pleading anonymity.

While Chief Minister A. Revanth Reddy and Union Ministers Ashwini Vaishnaw (Railways), G. Kishan Reddy (Coal & Mines, and Manohar Lal Khattar (MoHUA) are understood to have agreed on a joint oversight mechanism involving officials from both the Centre and the State, there is no record of similar participation by central representatives in earlier efforts.

Previously, Chief Minister Revanth Reddy and Mr. Khattar had agreed to appoint two officials each to review HMR Phase I valuations carried out by public sector entities — IDBI Capital for financial assessment plus transaction advisor and DMRC International for technical evaluation of operational health. A committee of secretaries and later a cabinet sub-committee cleared the respective reports.

Based on these twin reports (not made public), the Telangana government and L&T had agreed on an equity contribution of about ₹1,462 crore and later, the IRFC loan was secured. Now, it remains unclear whether SBI Caps will revisit the entire exercise or build on earlier findings. The development also coincides with an ongoing legal dispute between the State government and SBI over the sale of a five-acre land parcel at Raidurg, said the sources.

Although Mr. Kishan Reddy facilitated discussions with his Cabinet colleagues to push the project forward, the HMR’s expansion now appears to be back at square one. HMR Phase II remains in limbo, as the State cannot form a joint venture with the Centre without first assuming control of Phase I from L&T with help of the proposed loan to ensure seamless integration between the two phases.