Govt approves Rs 1,258 cr interest free loan to HURL's fertiliser revival projects

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The Cabinet today approved proposal to provide Rs 1,257.82 crore interest free loan to Hindustan Urvarak and Rasayan Ltd's three fertiliser revival projects.

The Cabinet Committee on Economic Affairs has approved the fertilizer department's proposal to grant interest free loan (IFL) equivalent to the interest during construction component of Rs 422.28 crore, Rs 415.77 crore and Rs 419.77 crore for Gorakhpur (Uttar Pradesh), Sindri (Jharkhand) and Barauni (Bihar) projects, respectively, to Hindustan Urvarak and Rasayan Limited's (HURL) fertilizer projects, according to an official statement.

The total value of the IFL will be Rs 1,257.82 crore, it said, adding that the IFL shall cover only the interest accrued during the scheduled period of construction and any escalation due to time or cost overrun will be borne by the JV company.

According to the statement, the IFL will be disbursed in the first three years during construction.

The repayment will be spread over a period of 11 years with a moratorium period of three years of disbursement period during construction and the repayment phased over the next eight years, it added.

Hindustan Urvarak and Rasayan, a joint venture company of National Thermal Power Corporation, Indian Oil Company, Coal India and Fertilizer Corporation of India / Hindustan Fertilizer Corporation was incorporated in June 2016 to implement the fertilizer revival projects at Gorakhpur, Sindri and Barauni.

Interest free loan will result in savings in the project cost expenditure and improvement in the project IRR and viability ratios, particularly the minimum debt service coverage ratio, the statement said.