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Govt plans to reduce interest rate on loan given to FACT

PTI | New Delhi |

The government is "actively considering" lowering interest rate on the Rs.1,000 crore loan given to state-run fertiliser firm FACT for its revival and expansion of production capacity to one million tonnes this fiscal.

Kochi-based Fertilisers and Chemicals Travancore Ltd FACT), which is facing a liquidity crunch, currently produces about 6 lakh tonnes of NPK fertilisers such as aluminium sulphate with an annual turnover of about Rs.2,000 crore.

"FACT is asking for reduced interest rate on Rs.1,000 crore loan that the Government of India has sanctioned. We are actively considering it," said Union Chemicals and Fertilisers Minister Ananth Kumar.

As per the agreement, FACT has to repay the loan amount along with interest in five years, with a moratorium of one year. The loan is being used for working capital requirement, clearing its pending dues and maximising capacity utilisation.

Blaming the previous UPA government for not providing timely help to the firm, Kumar said, "No funds or revival package was given to FACT during the UPA despite six ministers including AK Antony and Vayalar Ravi being from Kerala." 

The Modi government within three years in office has not only provided the loan but also revived the Kochi terminal for supply of natural gas to the plant, he added.

Kumar also said the previous government could not make use of the Kochi terminal for supply of natural gas to FACT, which was forced to buy it at a higher rate of $22 per mmbtu. "We are now supplying gas at $9.5 per mmbtu," he said.

The minister also said the revival package does not mean only providing monetary assistance, but also facilitating many other aspects of the business and ensuring the company is able to perform better.

FACT is the country's first fertiliser plant. Its revival and capacity expansion would boost supply in Kochi and entire South India.