Cabinet allows MeECL to raise bond to Rs 800 cr

SHILLONG, SEPT 22: The state Cabinet today approved a proposal of the power department for the state government to act as a bank guarantor to enable the Meghalaya Energy Corporation Limited to raise the bond to Rs 800 crore.

“We have agreed to extend this support for the required bank guarantee to enable the MeECL to raise the bond which is to the tune of Rs 800 crore,” chief minister Mukul Sangma told reporters after the cabinet meeting held here.

Stating that the decision was based on certain conditions, Sangma said the bond of Rs 800 crore will be raised through a national competitive bidding (NCB).

“The condition given is that the bond to be issued by the power department with the active participation by MeECL and the private agencies to be involved for floating the bond should be selected on the basis of price discovery through NCB.”

The chief minister, who informed the state government has been extending the guarantee to MeECL to raise loan, said that the total bank guarantee that has been extended to MeECL is Rs 1174 crore till date.

Out of this, he said that the power department will first release Rs 595.64 crore to the MeECL.

Asked, Sangma said the proposed bond amount to be raised will be utilized by the MeECL for dealing with the issue of liquidating outstanding loans with higher interest.

“This in a way is to enable MeECL for loan swapping. It will be to reduce the burden of interest repayment in the years to come by enabling the MeECL to utilize this money to liquidate those outstanding loans with higher interest,” he said.

According to the chief minister, the exercise will also enable the state government to save substantial amount of money on an annual basis which will also pave the way for MeECL to take care of cash flow gap which is Rs 287 crore in 2017-18.

Reacting to a query, Sangma said that there is an expected reduction by almost 2-3 per cent after the loans with higher interest are liquidated.

“The interest saving is projected at Rs 25-26 crore against a loan amounting to Rs 640 crore to be paid by MeECL after raising Rs 800 crore through the bond,” he added.

By Our Reporter