The centre yesterday approved a financial package to revive the loss-making public sector unit National Projects Construction Corporation.

The package involves the conversion of Rs219-crore loan plus the accumulated interest on into equity.

Briefing the media folowing a meeting of the cabinet committee on economic affairs, home minister P Chidambaram said NPCC has not been making profit.

"Nevertheless, we have agreed to convert a loan amount of Rs 219 crore with cumulative interest into equity and write down the value by 10 per cent."

NPCC was formed in 1957 under the ministry of irrigation (currently ministry of water resources) to undertake irrigation and hydel projects. It subsequently diversified in other construction like dams in remote areas and has ben associated with projects that the country regarded as showcases.

Chidambaram said the cabinet committee decided to approve the package despite questions over its economical viability as NPCC plays an important role in the development of the North East region.

The Singda earth dam and Khuga dam in Manipur, Maharani, Khowai and Manu barrage in Tripura, Loktak hydroelectric project in Manipur are some of NPCC's projects in the nort east.

"In terms of economics, there is a big question mark. The key point is that this corporation that has worked mainly in the North Eastern region, where very few private sector or joint sector companies venture. We need organisations to carry out works in that region," he said.

"NPCC is also involved in building some border roads and hopefully with this conversion to equity, their interest cost will come down and maybe their balance sheet will become stronger," he added.

Accordingly the CCEA approve the proposal that requires a conversion and a writedown  so that it could continue to undertake development projects in the north east he said.