Govt bails out SAIL, waives loan

According to fertiliser industry sources, the NFL sale should fetch the Government an amount between Rs 2,500 crore and Rs 3,000 crore since at least two of NFL’s five plants are relatively new.

Briefing newspersons, Infotech Minister Pramod Mahajan said the SAIL package included waiving Rs 5,073 crore given to it as a loan by the Steel Development Fund (SDF) as well as Rs 381 crore given to it by the Government. Italso decided to give SAIL a Government guarantee and interest subsidies to raise loans from the market to finance its VRS scheme as well as meet its repayment obligations on past loans.

In return, SAIL will disinvest its non-core assets like captive power plants, oxygen plants, alloy steel plants etc in a phased manner. Mahajan said the Cabinet did not discuss disinvestment of SAIL at all.

While Mahajan justified the SAIL package by stating that SAIL was a navratna and had lost money over the past few years because of adverse market conditions, steel secretary A K Basu indicated that the road to recovery would take a while. He said SAIL would show a marginal loss in the next fiscal year as well and only after that would it make profits.

The Cabinet granted a 45-day extension of the deadline for payment of licence fee dues of private cellular and basic telecom service providers, extending it to March 15. This is largely meant to help the Hinduja-promoted Fascel (Gujarat cellular circle) andModicom, the B K Modi-promoted Karnataka & Punjab cellular circle licencee.

The terms for the extension, however, are quite stiff. While the ministry was keen on softer terms, Attorney General Soli Sorabjee, who was asked to give his opinion on the matter, recommended that the firms also pay an additional simple interest per month of 3 per cent for this 45-day period. This will be over and above the interest liability specified in the licence agreement.

The companies will also have to submit affidavits for the extension and will face automatic withdrawal of the migration package, without any further notice, in case of failure to abide by the conditions (read clearing dues by March 15). The licencees will have to furnish bank guarantees (BG) "securitising" the full amount of outstanding dues and interest thereon calculated till March 15, 2000. The BG will have to be validated up to March 31, 2000. They will also have to pay a penalty of 2 per cent per month on the shortfall of "securitisation" up to thedate of furnishing the BG, on a proportionate basis for the number of days of delay beyond December 31, 1999.

The Cabinet Committee on Disinvestment, which also met on Tuesday, gave its approval for disinvestment of 51 per cent equity of the Government in National Fertiliser Ltd (NFL) to a strategic buyer along with transfer of management control. The Government has a 98 per cent stake in the profitable PSU — while it made a profit of Rs 41.15 crore in 1998-99, this was an 80 per cent fall over the previous year.

As per the SAIL package, an amount of Rs 5,073 crore which SAIL had borrowed from the SDF will be waived by the Government. In addition, the Government will also waive the Rs 381 crore which it had given to it as advances. The Government will provide it with guarantees with a 50 per cent interest subsidy for loan and interest thereon of Rs 1,500 crore to be raised by it to fund its VRS scheme. Guarantees will also be provided to it for raising another Rs 1,500 crore for making repayment on pastloans.

Disinvestment will be undertaken at the non-core assets of SAIL while protecting jobs of the employees at captive power plants at Bokaro, Durgapur and Rourkela; oxygen plant of Bhilai Steel Plant; Salem Steel Plant; Alloy Steel Plant, Durgapur; Visvesvaraya Iron and Steel Ltd (VISL), Bhadravati and Fertiliser plant at Rourkela. The entire restructuring is to be completed by March 2002 and SAIL will have to sign an MoU with the Steel Ministry.

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