The Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi has approved the proposal of Department of Fertilizers to grant Interest Free Loan (IFL) equivalent to the interest during construction (IDC) component of Rs 422.28 crore, Rs 415.77 crore, and Rs 419.77 crore for Gorakhpur, Sindri, and Barauni projects respectively to Hindustan Urvarak and Rasayan Limited (HURL) fertiliser projects.
The total value of the IFL will be Rs 1257.82 crore. The IFL will 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.
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.
Hindustan Urvarak and Rasayan Limited, a Joint Venture company of National Thermal Power Corporation, Indian Oil Company Limited, Coal India Limited, and Fertilizer Corporation of India Limited / Hindustan Fertilizer Corporation Limited 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.