New Delhi: The Cabinet Committee on Economic Affairs has given in-principal approval for the sale of the government's 52.63 percent stake in REC Ltd to Power Finance Corporation (PFC). The government is expected to garner around Rs 15,000 crore from this merger.
“The acquisition intends to achieve integration across the Power Chain, obtain better synergies, create economies of scale and have enhanced capability to support energy access and energy efficiency by improved capability to finance power sector. It may also allow for cheaper fund raising with increase in bargaining power for the combined entity.”
The government held 57.99 percent stake in REC, and 65.64 percent in PFC at September-end. However, the government holding in REC came down to 52.63 percent following stake sale through ETF.
Finance Minister Arun Jaitley told journalists that PFC will have management control of REC
adding that a ministerial panel will work out the pricing and other aspects of the deal. The budgeted target for PSU disinvestment is Rs 80,000 crore for the the year ending March 31, 2019.
Both REC and PFC are Central Public Sector Enterprises (CPSEs) under the Ministry of Power.