Cabinet approves grant of Interest Free Loan equivalent to interest during construction component to fertilizer revival projects at Sindri, Gorakhpur and Barauni by Hindustan Urvarak and Rasayan Limited

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.