Govt writes off Sikkim Mining Corporation loan to pave way for shutdown

New Delhi: The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, has accorded its approval for the waiver of loan totalling over Rs 4 crore outstanding against Sikkim Mining Corporation, paving the way for its liquidation. The original loan availed by Sikkim Mining Corporation was Rs 54 lakh and the interest amounted to Rs 370.40 lakh, totalling Rs 424.40 lakh. This, along with the amount of interest that would have accrued on the total amount from April 1 this year, together make up the total amount that has been written off by the CCEA.

This would ensure that further accumulation of interest on principal loan will get extinguished and the liquidation process of Sikkim Mining Corporation will get completed, a press release said.

Sikkim Mining Corporation had been in loss since inception

Sikkim Mining Corporation was established on the February 27, 1960 as Joint Venture undertaking of the government of Sikkim and the Central government. It was incurring losses every year since its inception. To optimise the financial health of the Corporation, a consultant was engaged in 1999 which inter alia suggested diversification of activities at Sikkim Mining Corporation and also strengthening of technical staff in conjunction with retrenchment of excess manpower at lower levels.

Govt looking to settle loan, shut down the state PSU

However, keeping in view the recurring losses incurred by the Corporation since its very inception, recommendation of Accountant General of Sikkim, and advice tendered by the erstwhile Planning Commission, both the partners of JVC (State and Central Government) engaged a consultant to spell out a road map for the future of the Corporation in 2003. On the basis of report of the consultant & 107th Report of Public Accounts Committee (PAC) of State Legislative Assembly of Sikkim, State and Central Governments took joint decision to close down the mining operations of Sikkim Mining Corporation and to settle all its loans and liabilities.

Consequently, mining operations of the Corporation at Bhotang and Phachey Khani mines were closed down with effect from January 1, 2007. Liabilities towards VRS etc of employees of the corporation were settled from the amount release by erstwhile Planning Commission (Rs 3.41 crore) and Ministry of Development of North Eastern Region (Rs 2.51 crore). Liabilities of the corporation to the tune of Rs 685.60 lakhs towards the state government of Sikkim were waived off by it. An amount of Rs 11.21 lakh accrued from the sale of scraps of machineries of the corporation was returned to the Central government.