The department of telecommunication will review proper utilisation of the guaranteed funds and will also review the guarantees annually to ensure that there is no risk of default in repayment of loans together with interest.
In a major relief to BSNL and MTNL, the finance ministry has approved issuance of a sovereign guarantee of Rs 15,000 crore, enabling the two companies to raise money by issuing long-term bonds and restructure their existing debt and meet some capex requirements.
The issuance of sovereign guarantee is part of the Rs 70,000-crore revival package announced by the government in October last year. “…sovereign guarantee of Rs 15,000 crore (Rs 8,500 crore to BSNL and Rs 6,500 crore to MTNL) for restructuring of their existing debts and meeting some capex requirements for launch of 4G services. The proposal has been examined in this department and agreed to subject to the adherence of terms and conditions,” an office memorandum of department of economic affairs said.
The department of telecommunication (DoT) will review proper utilisation of the guaranteed funds and will also review the guarantees annually to ensure that there is no risk of default in repayment of loans together with interest.
The government in October last year had approved a nearly Rs 70,000-crore revival package for BSNL/MTNL. The biggest chunk of the revival package — Rs 29,937 crore – was meant for voluntary retirement scheme (VRS) for employees above 50 years of age. This included Rs 17,169 crore ex-gratia amount and Rs 12,768 crore towards pension, gratuity, and commutation.
Apart from the VRS, the government has to provide Rs 23,814 crore towards administrative allocation of 4G spectrum and a sovereign guarantee of Rs 15,000 crore. The government also said that the two PSUs would monetise their assets like land worth Rs 38,000 crore over a period of four years.
The DoT had written a letter to the department of economic affairs on December 2, 2019, for issuing sovereign guarantee for the two firms. Both the firms have around Rs 40,000 crore of debt on their books. After the DoT letter, a series of meetings have taken place and DoT has also sent clarifications sought by DEA regarding the sovereign guarantee.