The Cabinet Committee on Economic Affairs chaired by Prime Minister Shri 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 ₹ 422.28 crore, 415.77 crore and 419.77 crore for Gorakhpur, Sindri and Barauni projects respectively to Hindustan Urvarak and Rasayan Limited (HURL) fertilizer projects.

The total value of the IFL will be ₹ 1257.82 crore.  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.

The IFL shall be disbursed in first three years during construction.  The repayment shall 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.

Background:

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 would result in savings in the Project Cost expenditure and improvement in the project IRR and viability ratios, particularly the minimum debt service coverage ratio.

Interest free loan support approved for fertilizer revival projects, covering construction-period interest with defined disbursement and repayment terms. Cabinet authorises an Interest Free Loan (IFL) to HURL covering only interest accrued during scheduled construction for Gorakhpur, Sindri and Barauni projects; escalation from time or cost overruns is to be borne by the JV. The IFL will be disbursed in the first three years during construction and repaid over an 11-year period with a moratorium corresponding to the three-year disbursement period and phased repayment over the following eight years.