The Meghalaya cabinet on Friday approved a proposal of the Meghalaya Energy Corporation Limited to raise the bond of Rs 800 crore with the state government as the guarantor.
“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.
He said the condition given was 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 recovery through NCB.
Stating that the decision was based on certain conditions, the chief minister said the bond of Rs 800 crore will be raised through a national competitive bidding (NCB). With this approval, the total bank guarantee extended to MeECL is Rs 1174 crore till date.
Out of this, Mukul Sangma said the Power department will release Rs 595.64 crore to the MeECL in the first instalment. He also said the proposed bond amount to be raised will be utilised 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 utilise 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.
“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,” the chief minister informed.