Larsen & Toubro,due to build and run a railway in Hyderabad,said it may have to re-look at the viability of the.141.3 billion ($2.8 billion) project because of hold-ups in acquiring land.If there is a further delay,then we will ask for more time in the 35-year concession,VB Gadgil,head of the L&T unit overseeing the project,said in an October 20 interview in Hyderabad.
But,if the government says we cant do anything about it,then we would have to re-look at the viability of the project, he added.He declined to say if Mumbai-based L&T would consider quitting the railway.The train system is already likely to open later than the 2015 target because only 50% of the land along the 71.2-kilometre network has been acquired by the government of Andhra Pradesh,Gadgil said.
Tata Motors,Posco and ArcelorMittal have also had investments disrupted in India because of court appeals by landholders against selling out.If we dont get the land,then definitely the project will be delayed, said Gadgil,the chief executive and managing director of L&T Metro Rail (Hyderabad).The government says they are trying their best,but there is no definite timeline. Delays will be unavoidable if land issues arent resolved within about a month as the company has been unable to order railcars and other equipment because of uncertainty about the opening date,he said.Larsen shares have declined 34% this year,compared with a 17% drop in the Sensex.
The company has spent.4.5 billion of its own funds on the project,including on engineering and studies,he said.It has yet to draw down any of the.114.8 billion 15-year loan it raised from local banks at 10.5% to fund construction,he said.
Hyderabad,home to the local operations of Microsoft and Facebook,plans to open the rail network as a growing population and rising car ownership creates traffic congestion.Bangalore opened its first metro line last week.
Purchase of some land near the citys airport for the rail networks depot has been delayed because of a legal dispute,he said.The matter is before the Andhra Pradesh High Court, said Reddy.Were confident of resolving it within two months,added Reddy.Delays in acquiring land contributed to the country missing infrastructure construction targets in the year ended March 31,2010,according to the Planning Commission.
The government has proposed legislation in Parliament aimed at expediting land acquisitions for industrial purposes,as it seeks private investment in roads,railways and airports.About $392 billion needs to be spent in India on mass urban transportation networks,including rail,in the next 20 years,McKinsey & Co said in a report last year.ArcelorMittal and Posco,which have $32 billion of planned projects in Orissa and Jharkhand,have waited more than six years because of delays in securing approvals and land
DNA NEWS:
Larsen & Toubro (L&T), India’s biggest engineering firm, may face difficulty in executing its biggest-ever build, operate and transfer project — Hyderabad Metro Rail — with issues like land acquisition for constructing key infrastructure and politics over protection of heritage structures along the road still remaining unresolved.
While residents of areas such as Sultanbazaar and Ameerpet are opposing change in the originally planned route, there are delays in acquiring land.
The residents are also up in arms over the possibility of the elevated track for metro resulting in dismantling of heritage structures built during the Nizam’s era.
According to sources, a key parcel of land required for building a depot on the outskirts of Hyderabad is still in the court, delaying a formal commissioning of works on the project. The company, however, has already begun some of the civil works, including soil testing, pending resolution of the issue.
“For now, it looks like there is going to be a delay in the project execution by few months. But that would not have any impact on the operation of the project by L&T since the delay would be adjusted in the concession period,” a source tracking the project said.
The over Rs16,000 crore, 71km, metro rail has been going through several hurdles ever since it was conceived.
“Though the elevated track goes through the median on the road, there is a need for constructing stations and other infrastructure. Additionally, real estate is a key component of the project, and the viability of the project is directly linked to the development of real estate attached to the metro infrastructure such as railway stations,” the source said.
For now, sources said, the land acquisition is halfway through and would take another three to six months to complete the process. “It’s now extremely doubtful if the project would be commissioned in 2014 as per schedule. It might get delayed by at least 12 to 24 months,” the source said.
Meanwhile, L&T is also said to be doubtful of the viability of the project, particularly with the interest rates likely to add to the overall costs. The company was to raise about Rs11,000 crore from various banks towards debt, which is yet to be drawn. The loans carry a 10.5% rate, payable in about 15 years.
About Rs450 crore has already been spent on the project so far with the funding largely being internal.
The project was originally awarded to B Ramalinga Raju’s family-owned Maytas. With Maytas landing in trouble due to the accounting scam in Satyam Computer Services, the deal was scrapped and L&T won the project in a fresh round of bidding. The government was keen on laying a foundation stone for the project in January 2011. However, various issues including the separate Telangana movement and the objections raised by groups protecting heritage structures have been forcing formal start of construction in addition to the delays in acquiring the required land along the proposed route.
Comment :
The land acquisition delay for Metro has once again exposed the inability of Sate Govt to take strong action and push ahead. This is in stark contrast to the times of Naidu when Roads were widened all across Hyderabad with forced land acquisition with court orders in hand. The Govt has failed to use courts effectively. Bangalore has once again surged ahead while HyderabadCity threaten to crumble with the weight of fast growing traffic.
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