Cabinet approves Rs 1,258 crore interest-free loan for three fertilizer projects


New Delhi: The Union cabinetchaired by Prime Minister Narendra Modi today approved a proposal to grant Interest Free Loan (IFL) worth Rs 1,258 crore for three fertilizer projects of Hindustan Urvarak and Rasayan Limited (HURL).

The loan amount is equivalent to the Interest During Construction (IDC) component of Rs 422.28 crore, 415.77 crore and 419.77 crore for Gorakhpur, Sindri and Barauni projects.

“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 Joint Venture (JV) Company,” the government said in an official statement.

Also Read: Cabinet approves policy framework for exploitation of unconventional hydrocarbons

The IFL will be disbursed in the first three years of construction and the repayment will be spread over 11 years with a moratorium of three years of disbursement period during construction.

HURL was incorporated in June 2016 to implement the fertilizer revival projects. It is a Joint Venture between NTPC, Indian Oil, Coal India and Fertilizer Corporation of India Limited.

The Interest free loan is expected to result in savings in the project cost expenditure and improvement in the projects’ Internal Rate of Return (IRR) and viability ratios, particularly the minimum debt service coverage ratio.