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Disinvestment of 10 percent paid up equity capital in Coal India Limited



Disinvestment of 10 percent paid up equity capital in Coal India Limited 
The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, has approved the disinvestment of 10 percent paid up equity capital of Coal India Limited. This implies divesting of 63,16,36,440 shares of Face Value of Rs. 10 each out of the Government of India shareholding of 78.65 percent (after adjusting one percent equity to be offered for sale to the employees of CIL as per CCEA decision in September 2014, which is under process of implementation) through public offering in the domestic market. 


The paid up equity capital of the CIL is Rs.6,316 crore. After the disinvestment of 10 percent equity, the GoI’s shareholding in CIL would come down to 68.65 percent (with slight variation based on outcome of sale of onepercent equity shares to employees of CIL).

The disinvestment transaction will be an Offer for Sale (OFS) of shares by the Promoters through the Stock Exchange Mechanism method as per the Securities and Exchange Board of India (SEBI) Rules and Regulations. 

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Revised cost estimate for construction of Rail-cum-Road Bridge across river Ganga at Munger 
The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi has given its approval for revised cost estimate amounting to Rs.2774 crore with Railway share as Rs.1247 crore and Ministry of Road Transport and Highways share as Rs.1527 crore for construction of Rail-cum-Road Bridge across River Ganga (14 kms) at Munger with a provision that the cost of land for road approaches may increase in future as the State Government of Bihar has not yet initiated acquisition proceedings for the same.

The railway line part of this project is likely to completed during the current financial year.

Munger, Khagaria, Saharsa, Bhagalpur districts of Bihar will be benefitted through this project.

Background:

Rail-cum-Road Bridge across river Ganga at Munger was included in supplementary Railway Budget for 1997-98 for providing adequate infrastructure for all season rail and road connectivity between North and South Bihar for rapid economic development of the State. This bridge would also produce an additional connectivity to North East region States. 

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Extension of the Indian Development and Economic Assistance Scheme 
The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, has given its approval for second  extension  to  the  Indian  Development  and  Economic Assistance  Scheme (IDEAS).
The Government of India has been extending Lines of Credit to African and other developing countries under this Scheme since 2005-06. The first extension to the scheme was granted in 2009-2010.
Since the objectives of the scheme continue to be relevant, it has been decided to give second extension to the Scheme for another five years i.e. from 2015-16 to 2019-20.
Financial implication is towards payment of Interest Equalization Support to the lending bank, for which budgetary provision shall be made by the Department of Economic Affairs every year, as follows:

 (in US dollar million)
Year
2015-16
2016-17
2017-18
2018-19
2019-20
2015-16 to 2019-2020
Amount
95.43
104.42
116.47
129.08
143.95
589.34*
*Approximately Rs.3771.77 crore calculated @ 1 USD = Rs.64

The above mentioned amount includes the interest equalization support on existing LoCs as well as new LoCs to be issued during 2015-16 to 2019-2020.
The IDEA Scheme, with suitable modifications and amendments, will continue to be implemented through the Department of Economic Affairs (DEA) in the Ministry of Finance. MEA shall select specific projects keeping in view diplomatic considerations and requests received from various developing countries. The project proposals shall be examined by the Standing Committee comprising JS (DPA), MEA and JS (BC), DEA. On receiving approval of the External Affairs Minister on the recommendations of the Standing Committee, MEA shall forward the proposal to DEA for seeking the approval of Finance Minister. DEA will then issue a formal letter conveying sanction of the Line of Credit.
The LoC will be operated through Export Import Bank of India or any other willing bank/ lending agency decided with the approval of Finance Minister. The lending bank will raise resources from the market to finance the LoCs. The recipient/borrowing country shall provide sovereign guarantee to the lending bank. The Gol will provide the Interest Equalisation Support (IES) and further guarantee to the lending bank.
Lines of Credit form an important component of India's diplomatic strategy and have been very useful in generating goodwill and building long term partnerships. The scheme also attempts to promote India's strategic political and economic interest abroad by positioning  it  as  an  emerging  economic  power,   investor country and  partner for developing countries.
96 LoCs aggregating USD 5005.75 million were issued through Exim Bank during the period 2005-06 to 2009-10 to 49 countries. The IES paid by Government of India from its budgetary provisions to the lending bank during the above period was Rs. 521.77 crore.
On the last occasion, while granting first extension to the IDEA Scheme, CCEA in its meeting held on 3.3.2011, had approved a sum of 1200 million US dollar Lines of Credit to be extended to African countries and 500 million US dollars for non-African developing countries for each of the five years from 2010-11 to 2014-15.
108 LoCs aggregating USD 8924.21 million were issued through Exim Bank during the period 2010-11 to 2014-15 to 49 countries. The IES provided by Gol from its budgetary provisions to Exim Bank during this period was Rs. 1382.18 crores. In sum, 222 LoCs aggregating USD 14640.19 million have been issued to 64 countries so far. The total amount of IES paid by Gol to Exim Bank up to 31.3.2015 is Rs. 1903.95 crore.
Background:
The LoCs are presently being operated through Export-Import Bank of India, which raises resources from the market and provides LoCs to recipient Governments at concessional rates. The Government of India (Gol) backs the Lines of Credit by signing a Deed of Guarantee in favour of the lending bank to guard against any default by the borrowing Government in payment of interest and principal to the lending bank. The Gol also supports the Exim Bank by way of paying IES - i.e. the difference between the cost of borrowing and the concessional lending rate.

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3rd and 4th lines between Budhapank and Salegaon via Rajathgarh Railway Line 
The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi has given its approval for 3rd and 4th lines between Budhapank and Salegaon via Rajathgarh Railway Line of 85 km each with a cost of Rs.1172.92 crore.

The project is likely to be completed in the next three years during 12th and 13th Plan period. Multiple lines on this railway line will greatly ease the ever increasing freight traffic between these sections thereby increasing the revenue of Railways.

Angul, Dhenkanal and Cuttack districts of Odisha will be benefitted through this project.

Background: 

Budhapank junction is located on Sambalpur-Angul-Cuttack section and Salegaon on Angul-Nergundi section and the existing line is catering to the originating traffic from Mahanadi Coal Fields to the Paradip and Vishakhapatnam ports and siding traffic originating from/to the several power plants and other coal based industries in the area. 

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Authorizing National Highways Authority of India (NHAI) for rationalized compensation to concessionaires in case of delays not attributable to concessionaires for languishing highway projects on BOT mode 
The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi has given its approval for:

(i) Authorizing NHAI to allow extension of concession period for all current projects in BOT (Toll) mode that are languishing during the construction period due to causes NOT attributable to the concessionaire, subject to the following:

a. The tenure of the Operations Period as envisaged originally in the concession agreement may remain unchanged. This will result in a corresponding increase in concession period.

b. The decision regarding eligibility of projects for the extension of concession period, and the extent of time extension required may be taken by NHAI on a case to case basis based on the recommendation of the concerned Independent Engineer (IE). The concerned IE, both individual and the firm, shall be accountable for the assessment of the extension recommended in the concession period.

c. Authority shall follow the guidelines while determining the period of delay NOT attributable to the concessionaire.

d. The projects using the above special dispensation shall have to achieve physical completion in the next 3 years.

(ii) Authorizing NHAI to pay compensatory annuities to the concessionaire corresponding to the actual period of delay NOT attributable to the concessionaire upon successful completion of the project i.e on achieving COD, subject to the following:

a. While the construction period will get enhanced, the tenure of the concession will remain unchanged.

b. The total number of annuities payable, including the compensatory annuities, will be capped by the number of annuities envisaged in the said Concession Agreement.

c. Compensatory Annuity(ies) payable by the Authority to the concessionaire for such delayed period would be the product of Average Daily Annuity and the actual period of such delay in number of days as recommended by the Independent Engineer (IE) of the concerned project, and approved by the Authority as per guidelines.

d. The decision regarding eligibility of projects for accessing such dispensation for delays NOT attributable to concessionaires and the duration of such delays may be considered by NHAI on a case to case basis based on the recommendation of the concerned Independent Engineer (IE). The concerned IE, both individual and the firm, shall be accountable for the above assessment.

e. Authority shall follow the guidelines while determining the period of delay NOT attributable to the concessionaire.

f. The projects using the above special dispensation shall have to achieve physical completion in the next three years.

By adopting the policy, all major stakeholders in the PPP arrangement - the Authority, lender and the developer, concessionaire would have an increased comfort level resulting in revival of the sector and this will bring relief thereby to citizens /travellers in that area.

The main object of the proposal is to revive the languishing highway projects in the country. It will facilitate uplifting the socio-economic condition of the entire nation due to increased connectivity across the length and breadth of the country leading to enhanced economic activity. This dispensation will, however, NOT be applicable for those BOT projects where tolling is permitted from the Appointed Date.

Background:

• The Model Concession Agreements (MCA) for NH projects through Public Private Partnership (PPP) on Build-Operate-Transfer (BOT) (Toll) and BOT (Annuity) modes were prepared by the Planning Commission and NHAI respectively which are being followed at present for the majority of NH projects.

• Performance of contracts and expeditious completion of works largely depend upon timely possession of land and grant of statutory clearances like Forest, Environment and Wildlife clearances, approval of General Arrangement Drawings (GAD) from Railways, utilities shifting, etc. In the MCAs for BOT (Toll) & BOT (Annuity) projects, these issues have been identified as Conditions Precedent and NHAI (Authority) is required to fulfil these before the concessionaire can start the construction on the project, i.e., the Appointed Date. Some of these conditions are mutually waived to ensure an early start of the project. However, during project implementation, lack of such clearances often lead to cost escalation and undue delays.

• In respect of almost all BOT projects awarded by NHAI during 2011-12 and 2012-13, mutual waiver of Conditions Precedent were granted for declaration of Appointed Date. In several cases, Appointed Date was declared without full availability of land and without statutory clearances like Environment/Forest clearances, etc. being provided. Such deficiencies prevented timely construction of such projects although technically, the Appointed Date was declared in these projects.

• Lenders who are major stake holders in highway projects have, on many occasions, raised the issue of non-availability of land and/or statutory approvals and clearances as amongst the most critical issues contributing towards delay and consequent cost overruns in the execution of highway projects. They have also indicated that this problem needs to be suitably addressed in the MCA for BOT projects.

• Therefore, BOT (Toll) projects, suffer from double jeopardy because of: o Reduced tolling period; and

• Increased construction cost on account of delays in proving land and regulatory clearances by the Authority.

• Further, in case of BOT (Annuity) projects, the extant MCA limits the entitlement of the Concessionaire to One Annuity Payment only in case of delays in Completion of Construction due to reasons NOT attributable to the concessionaire, irrespective of the period of such delay. It is evident that such entitlement is inadequate for the concessionaire in cases where such delay extends beyond one annuity period or six months, i.e. 180 days. Such a provision lands the concessionaire with financial losses, despite there being no reason attributable to him for the delay. These anomalies requires to be addressed.

• When projects are languishing, asymmetric allocation of risk between the Authority and the concessionaire as per extant provisions of the MCA often encourages the private party to resort to legal recourse. Apart from inordinate delays in execution of projects, there are substantive financial claims that impact the Government/Authority. In most such cases, the awards made by the judicial authority are in favour of the concessionaires. During such prolonged process of litigation, the highway asset under construction deteriorates further.

• The above issue will be addressed through an appropriate policy intervention which would provide for reasonable compensation for concessionaires for delays NOT attributable to them; both for DOT (Toll) and EOT (Annuity) projects. 

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Doubling of Kottavalasa-Koraput Railway line 
The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi has given its approval for doubling of Kottavalasa-Koraput Railway line of 189.278 km with a completion cost of Rs.2977.64 crore.

Doubling of this line will greatly ease the ever increasing freight traffic between these sections thereby increasing the revenue of Railways. The project is likely to be completed in the next seven years during 12th and 13th Plan period.

Koraput district of Odisha, Vizianagaram and Vishakaphatnam districts of Andhra Pradesh will be benefited through this project.

Background: 

The doubling from Kattavalasa to Koraput traverses entirely through the States of Odisha and Andhra Pradesh. The doubling is necessitated in view of the demand of increasing goods traffic due to increase in production of goods and minerals in the vast catchment and subsequent transportation requirement resulting in the requirement. 
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Extension of Crime and Criminal Tracking Network and Systems Project 
The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, has given its approval to the proposal of the Ministry of Home Affairs for a major revamp of the Crime and Criminals Tracking Network and Systems (CCTNS) Project and has decided to implement Integrated Criminal Justice System (ICJS) by integrating CCTNS with E-Courts. E-prisons, Forensics and Prosecution- the key components of the criminal Justice System. This will ensure quick data transfer among different pillars of criminal justice system, which will not only enhance transparency but also reduce processing time. This project is now fully aligned with the vision of the Smart policing and Digital India of the Government of India. Police-Citizen interface will undergo a major shift with the implementation of this project, as a number of services will be enabled through citizen portal.

The Government has decided to fast track the implementation and complete the implementation of the CCTNS project by March 2017 including implementation of ICJS. Major new components included as part of the revamped project are Integrated Criminal Justice System (ICJS), Citizen Portal having interfaces with various e-Governance projects like Aadhaar, National Population Register, Vaahan Project of the Ministry of Surface Transport, National Emergency Response System Project etc.

To keep pace with changing scenario, the cabinet also decided to approve in principle design of next phase of CCTNS Project so that additional functionalities not yet implemented may also be included and police functioning in the country is fully computerized. The total outlay for the project is Rs. 2000 crore, and also includes Operation & Maintenance phase for additional five years up to March 2022.

Crime and Criminals Tracking Network and Systems (CCTNS) Project will interconnect about 15000 Police Stations and additional 5000 offices of supervisory police officers across the country and digitize data related to FIR registration, investigation and charge sheets in all Police Stations. This would lead to development of a national database of crimes and criminals. In the last one year significant outcomes have been achieved which is evident from the fact that more than 11600 Police Stations in the country are entering 100 percent FIRs through CCTNS software and more than 26 Lakh FIRs have been registered through CCTNS in last one year alone.

The Full implementation of the Project with all the new components would lead to a Central citizen portal having linkages with State level citizen portals that will provide a number of citizen friendly services. These include services like Police Verification for various purposes including passport verification, reporting a crime including cyber-crime and online tracking of the case progress, online reporting of grievances against police officials, accessing Victim Compensation Fund and legal services etc.

The project will enable National level crime analytics to be published at increased frequency, which will help the policy makers as well as lawmakers in taking appropriate and timely action, it will also enable Pan-India criminal/accused name search in the regional language for improved inter-state tracking of criminal movement. 

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Doubling of Koraput-Singapur Road Railway line 
The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi has given its approval for doubling of Koraput-Singapur Road section railway line of 164.56 km with a completion cost of Rs.2361.74 crore.

Doubling of this line will greatly ease the ever increasing freight traffic between these sections thereby increasing the revenue of Railways. The project is likely to be completed in the next seven years during 12th and 13th Plan period.

Koraput and Rayagada districts of Odisha will be benefited through this project.

Background: 

The existing line Koraput-Singapur Road is used as a transportation corridor of goods traffic mainly for minerals and mine products. The demand of goods traffic on the existing single line is increasing over a period due to increase of production of goods and minerals in the vast catchment and subsequent transportation requirement resulting in the requirement of doubling of the existing single line to cater to the goods traffic on this already saturated line. 

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Doubling of Jagdalpur-Koraput Railway line 
The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi has given its approval for doubling of Jagdalpur-Koraput section railway line of 110.22 km with a completion cost of Rs.1839.02 crore.

Doubling of this line will greatly ease the ever increasing freight traffic between these sections thereby increasing the revenue of Railways. The project is likely to be completed in the next seven years during 12th and 13th Plan period.

Koraput district of Odisha and Bastar district of Chhattisgarh will be benefited through this project.

Background: 

The approved doubling from Jagdalpur to Koraput traverses entirely through the States of Odisha and Chhattisgarh and is necessitated in view of the demand of increasing goods traffic over a period of time due to increase in production of goods and minerals in the vast catchment and consequent transportation requirement. 

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Initial Public Offer of Cochin Shipyard Limited 
The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, has given its approval for issue of an Initial Public Offer (IPO) of Cochin Shipyard Limited (CSL).

The approval is for issue of an IPO to the public consisting of 3,39,84,000 equity shares of Rs. 10 each amounting to an equity capital of Rs. 33.984 crore of CSL consisting of fresh issue of 2,26,56,000 equity shares and sale of Government of India's stake in CSL worth 1,13,28,000 equity shares of Rs. 10, through a public offering in the domestic market according to Securities and Exchange Board of India (SEBI) rules and regulations.

The fresh shares are being issued by CSL in order to part-finance the following areas for expansion in short and medium term: (i) Setting up of an International Ship-repair Facility (ISRF) at Cochin Port Trust area, and, (ii) Setting up of a large dry dock within the CSL premises to take up construction of larger ships such as large sized Aircraft Carriers, VLCCs etc. and to take up underwater repairs to rigs and semi submersibles. The disinvestment of the Government of India's stake in CSL is in line with the Government's decision on the issue. It will raise resources for the Government due to the sound financial condition of CSL. There would be no financial outgo from the Government on account of the issue of shares. Instead, the Government would earn revenue due to sale of its shares to the public.

Background: 

CSL was incorporated in 1972 as a fully owned Government of India Undertaking and was conferred Miniratna-I status in 2008. 
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Interest Equalisation Scheme on Pre & Post Shipment Rupee Export Credit with effect from 1st April, 2015 for five years 
The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, has given its approval for Interest Equalisation Scheme (earlier called Interest Subvention Scheme) on Pre & Post Shipment Rupee Export Credit with effect from 1st April, 2015 for five years. The scheme will be evaluated after three years.
The following are the features of the Interest Equalisation Scheme:
(i)        The rate of interest equalisation would be 3 percent. The scheme would be available to all exports of MSME and 416 tariff lines. Scheme would not be available to merchant exporters.
(ii)           The duration of the scheme would be five years with effect from 1.4.2015.
(iii)      The scheme would be funded from the funds available with Department of Commerce under non-plan during 2015-16 and the restructured scheme would be funded from plan side from 2016-17 onwards,
(iv)     Ministry of Commerce & Industry may place funds in advance with RBI for requirement of one month and reimbursement can be made on a monthly basis through a revolving fund system,
(v)      On  completion  of three years of operation  of the  scheme,   Department of Commerce may initiate a study on impact of the scheme on export promotion and its further continuation. The study may be done through one of the IIMs.
The operational instructions of the scheme would be issued by RBI.
Financial implication of the proposed scheme is estimated to be in the
range of Rs. 2500 crore to Rs. 2700 crore per year. However, the actual financial implication would depend on the level of exports and the claims filed by the exporters with the banks. Funds to the tune of Rs. 1625 crore under Non-plan Head of account are available under Demand of Grants for 2015-2016, which would be made available to RBI during 2015-16.
The scheme will help the identified export sectors to be internationally competitive and achieve higher level of export performance.
The scheme covers mostly labour intensive and employment generating
sectors   like   processed   agriculture/food   items,   handicrafts,   handmade   carpet (including silk), handloom products, coir and coir manufactures, jute raw and yarn and other jute manufactures, readymade garments and made ups covered under Chapter 61-63, fabrics of all types, toys, sports goods, paper and stationary, Cosmetics and Toiletries, Leather Goods and footwear, Ceramics and Allied  Products, Glass and Glassware, Medical and Scientific Instruments, Optical Frames, Lenses, Sunglasses Etc., Auto Components/Parts, Bicycle & Parts, Articles of Iron or Steel (Notified lines), Misc. Articles of base metals (Notified lines), Industrial Machinery, Electrical and Engineering items, 1C Engine, Machine tools, Parts (Notified lines), Electrical Machinery and Equipment (Notified lines), Telecom Instruments (Notified lines) and all items manufactured by SMEs other than those covered above.
The list of 416 tariff lines is given below:
S.No.

Sector

Coverage

No of HS4 lines

1

Process agriculture/Food items

All lines

22

2

Handicraft

All lines

37

3

Carpet (Excl. Silk) Handmade

All lines

5

4

Handloom Products

All lines

2

5

Coir & Coir Manufactures

All lines

5

6

Jute Raw, Yarn

All lines

2

7

Other Jute Manufactures

All lines

1

8

Readymade Garments and Made ups ( Ch 61-63)

All lines
42

9

Fabric of all types

All lines

33

10

Toys

All lines

1

11

Sports Goods

All lines

8

12

Paper, Stationary

All lines

8

13

Cosmetics and Toiletries

All lines

8

14

Leather Goods and footwear

All lines

7

15

Ceramics and Allied Products

All lines

12

16

Glass and Glassware

All lines

17

17

Medical and Scientific Instruments ,

All lines

15

18

Optical Frames, Lenses, Sunglasses Etc

All lines

4

19

Auto Components/Parts

All lines

6

20

Bicycle & Parts

All lines

3


21

Articles of Iron or Steel

Notified lines

20


22

Misc. Articles of base metals

Notified lines

10


23

Industrial Machinery, Electrical and Engineering items, 1C Engine, Machine tools, Parts

Notified lines

141


24

Electrical Machinery and Equipment

Notified lines

1


25

Telecom Instruments

Notified lines

6


26

All items manufactured by SMEs other than those covered above

All lines






Grand Total



416




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Segregation of Civil Construction cost from capital cost of National Highways projects for appraisal and approval 
The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, has given its approval to segregate construction cost from cost for land acquisition, centages and pre-construction activities for the purpose of appraisal and approval of National Highways (NH) projects for the following dispensation:

(i) All NH projects with a civil construction cost of up to Rs.1000 crore shall be appraised by SFC/EFC/PIB headed by secretary, Road Transport and Highways and approved by Minister, Road Transport and Highways.

(ii) All NH projects with a civil construction cost above Rs.1000 crore shall be appraised by PPPAC/EFC/PIB headed by Secretary, Department of Economic Affairs/Expenditure and approved by CCEA.

By adopting the policy, the avoidable delays in the process of appraisal and approval of NH projects will be suitably addressed. Speedy appraisal and approval will help in meeting the award target of 10,000 km set for this year.

Background: 

Currently, as per standard practice before getting an investment approval from the Cabinet/Cabinet Committee, all NH projects are first appraised by SFC/EFC/PIB/PPPAC. In addition to the above, many rounds of appraisal are also carried out by various Committees like the Standing Cost Committee, etc. under the Ministry of Finance, MoRTH and/or NHAI to examine its viability and cost effectiveness.

PPPAC is an appraisal body for Infrastructure Projects to be implemented on Build-Operate-Transfer (BOT) (Toll, Annuity and now Hybrid Anniity) under the Ministry of Finance, Department of Economic Affairs having representation of Ministry of Finance as well as NITI Aayog, Ministry of Road Transport and Highways, Department of Legal Affairs, and NHAI. As per OM no 1/22/2012-PPP dated 18.02.15, PPPAC appraises and approves the Total Project Cost (civil cost + centages) of BOT projects, where the financing is expected to be raised by the concessionaire. This cost excludes the cost of pre-construction activity which is already undertaken and paid for by the Authority.

However, in case of EPC projects, the EFC/PIB appraises and approves Capital Cost that includes construction cost, centages, cost of pre-construction activities and the cost of Land Acquisition cost ;

Above said multiple stages of examination and appraisal of the same project by different Ministry/Department/Committees cause avoidable delays in award of NH projects. Taking note of such difficulties and with a view to minimize levels of decision making, the CCEA has empowered the Ministry of Road Transport and Highways to decide on the change in the mode of delivery of individual NH projects.

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Direct subsidy to sugarcane growers 
Sustained surpluses of production over domestic consumption in the last five years has led to subdued sugar prices, which has stressed the liquidity position of the industry leading to a build up of cane price arrears. During sugar season 2014-15, the peak cane price arrears were Rs.21,000 crore as on 15/4/2015.

The Central Government has, in the last one year, taken several steps to mitigate the situation and protect livelihoods of cane farmers. To improve liquidity of sugar mills and facilitate payment of cane dues arrears, the Government had increased the export incentive on raw sugar from Rs 3300/MT to Rs. 4000/MT in the sugar season 2014-15. Funds were allocated to support 14 lac MT (LMT) of raw sugar exports.

The Government has also fixed remunerative prices for Ethanol supplied for blending with petrol (Rs.42/liter). Blending targets under the Ethanol blending program (EBP) has been scaled up from 5% to 10%. The Government has also waived the excise duties on ethanol in the current sugar season resulting in Rs.5/ liter extra revenue realization to incentivize ethanol supplies. As a result, supplies of 103 crore Litre of ethanol was contracted by the OMCs after first offer; which is a substantial increase as compared to 32 crore Litre in the previous sugar season.

To further help the industry clear cane dues arrears, the Government has disbursed soft loans to the extent of Rs. 4,047 crore. To ensure that farmers are paid their dues expeditiously, the financial assistance has been passed on directly to the cane growers by the banks after obtaining the list from the mills. Furthermore, the Government has provided one year moratorium on this loan, and will bear the interest subvention cost to the extent of Rs. 600 crore for the said period.

To further ensure timely payment of cane dues in the current sugar season, the Government has decided to provide a production subsidy @ of Rs. 4.50 per quintal of cane crushed to offset cane cost. The said subsidy shall be paid directly to the farmers on behalf of the mills and be adjusted against the cane price payable to the farmers towards FRP including arrears relating to previous years. Subsequent balance, if any, shall be credited into the mill’s account. Priority will be given to settling cane dues arrears of the previous years.

The Government has notified mill-wise Minimum Indicative Export Quota (MIEQ) for export of sugar. A national grid allocating ethanol supplies to Oil Marketing Companies (OMCs) by distilleries attached to sugar mills under Ethanol Blending Program (EBP) has been notified. The production subsidy is a performance incentive and will be provided to those mills which have exported at least 80% of the targets notified under the MIEQ and in case of mills having distillation capacities to produce ethanol have achieved 80% of the targets notified by the Department under the EBP. 


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