Govt waives Rs 251 cr penal interest on loans to Visakhapatnam Port

The government today waived Rs 251 crore penal interest on loans extended to Visakhapatnam Port Trust (VPT).

The decision was taken by the Cabinet Committee on Economic Affairs chaired by the Prime Minister Narendra Modi.

"Approval has been given for "Waiver of Penal Interest amounting to Rs 250.89 crore in respect of VPT as on 31.03.2017 and further accruals thereon till date of approval of waiver, Ministry of Shipping said in a statement.

It said VPT will pay penalty @0.25 per cent of Penal Interest as on date of approval of waiver of Penal Interest.

Besides, it will "pay the outstanding Principal of Rs 44.69 crore and outstanding interest as on the date of approval of waiver, in one single instalment in the Financial Year 2018-19, the statement said.

VPT had availed of Rs 110.41 crore in loans at different points of time beginning from 1970-71 to 1984-85 to finance its Outer Harbour Project to accommodate deep draft vessels of 100,000 DWT for iron ore exports.

Each loan had a moratorium period of 5 years from the date of sanction, the statement said, adding that VPT made payments towards interest for the period of moratorium on various loans till 1978-79.

However, it could not be continued with the repayment during the period from 1979-80 to 1989-90 due to revenue losses to the Port.

The statement said it started repayment of loan amount (both principal and interest) with effect from 1990-91 onwards.

As on March 31, 2017, VPT has a total loan liability of Rs 354.23 crore (Rs 44.69 crore towards defaulted Principal, Rs 58.65 crore towards defaulted Interest and Rs 250.89 crore towards Penal Interest).

Further, the Port has a future fund requirement of around Rs 2671.79 crore for different upcoming developmental projects and employees' pension liabilities up to 2018-19.

Therefore, the government said Port is not in a position to repay the total loan liability of Rs 354.23 crore.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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