The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi has given its approval for waiving of Penal Interest on Government Loans to Paradip Port Trust (PPT) as per following:

i    Waiver of penal interest amounting to ₹ 1076.59 crore in respect of PPT as on 31.03.2017 and further accruals thereon till date of approval of waiver.

ii    PPT to pay penalty @ 0.25% of Penal Interest as on the date of approval of waiver of penal Interest.

iii    PPT to start the re-payment of outstanding principal of ₹ 387.74 crore and outstanding interest as on date of approval of the waiver and the re-payment to be completed in two instalments in 2018-19 and 2019-20.

Background:

Paradip Port Trust (PPT) had availed ₹ 642.69 crore of loan under different heads at different points of time beginning from 1967 to 2002 to finance its various infrastructure projects. Each loan was to be repaid in 20 yearly installments with a five year moratorium period. PPT was incurring losses upto the year 1987-88 and there was huge deficit in revenue account due to insufficient cargo. As a result of which  PPT could not start its repayment as per schedule. As on 31.03.2017, PPT has a total loan liability of ₹ 1743.69 crore (Rs.387.74 crore towards defaulted principal, ₹ 279.36 crore towards interest and ₹ 1076.59 crore towards penal interest).

Further, the Port has a future fund requirement of around ₹ 6,695 crore for different upcoming developmental projects and employees’ pension liabilities upto 2018-19. Therefore, the Port is not in a position to repay the total loan liability of ₹ 1,743.69 crore.

Waiver of penal interest approved for a port trust, subject to a reduced penalty and staged principal repayment obligations. Approval was given for a waiver of penal interest on government loans to Paradip Port Trust, subject to conditions: PPT must pay a reduced penalty computed on the penal interest outstanding as of the approval date and commence repayment of outstanding principal and accrued interest, completing repayment through two instalments across the following two financial years.