Re fall to impact cost of Hyderabad metro rail project: L&T

Engineering and construction major, L&T Limited, on Friday said that the strengthening dollar was going to impact the overall cost of the Rs 14,000-crore Hyderabad metro rail project for which it had to procure all the technology and systems from foreign vendors.

However, efforts are being made to indigenise components that otherwise would require dollar payment to a much extent, besides hard-bargaining with the vendors to bring the costs down, according to the company.

“While I have not imagined to see the price of the dollar appreciating to this level in my lifetime, there is a hope to minimise the cost escalation by way of indegenisation as most of these vendors are setting up operations in India with an eye to similar projects in the near future,” VB Gadgil, chief executive and managing director of L&T Metro Rail (Hyderabad) Limited, the concessionaire of the public-private-partnership project, told reporters.

The company had earlier estimated the cost of procurement of metro rail systems to be in the range of Rs 4,000 crore to Rs 5000 crore when the dollar price was around Rs 48.

The good part is that most of the foreign vendors, with whom the company is currently in discussions, have been planning to set up operations as the country is now taking 15-20 metro rails in major cities, according to him.

The company had signed the concession agreement with the Andhra Pradesh government for the 72-kilometre metro rail project in September 2010 and had so far spent about Rs 500 crore on ground.

The company is expected to finalise the vendor for supply of rolling stock by next month, the value of which would be between Rs 1,500 crore and Rs 1,700 crore, according to Gadgil. The company is currently in discussion with four vendors, including a consortium formed by Hyundai Rotem and Bharath Earth Movers Limited (BEML), for the rolling stock, he said.

The company is hopeful of completing the project within the stipulated time frame of five years from the date of signing the concession agreement despite initial delays in land acquisition etc.