CCEA approves REC sale to PFC

The Cabinet Committee on Economic Affairs (CCEA) has accorded in-principle approval for the sale of the central government’s 52.63 per cent stake in the Rural Electrification Corporation (REC) to the Power Finance Corporation (PFC) along with the transfer of management control. The deal is likely to raise over Rs 140 billion for the government. The CCEA will work out the modalities of the acquisition based on recommendations submitted by a committee of secretaries and the deal is expected to be completed by the end of 2018-19. PFC is planning to fund the acquisition of REC by borrowing Rs 70 billion from domestic banks, for which it is at the negotiation stage. PFC is also likely to moderate its dividend payout as well as disbursements to loan accounts in 2018-19. The company is not expected to raise funds through the issue of shares this year as the borrowings along with internal resources and several other steps will enable the firm to fund a buyout of Rs 140 billion as well as manage the capitalisation issue.