New Delhi: Following up on its talk to strengthen the Central Public Sector Enterprise (CPSE) by consolidation, acquisition or mergers, the government is looking to sell its stake in Power Finance Corp (PFC) to Rural Electrification Corp Ltd (REC), a senior finance ministry official said on September 24. The deal is expected to fetch the exchequer an amount of Rs 13,000 crores.
“The government sees a lot of synergy between the two power sector lenders and the proposal of REC acquiring government’s stake in PFC is something that is being looked at,” the official said. If the deal is struck, it will follow the same template as the acquisition of the government’s entire 51.11 percent stake in oil refiner HPCL by state-owned ONGC in 2017-18. As on June 30, the government held 65.61 percent stake in PFC. While REC finances and promotes rural electrification projects across India, PFC, which is under the administrative control of the Ministry of Power, is a non-banking financial company in the power sector.
The government, which had set a divestment target of Rs 800 billion for 2018-19 (Apr-Mar), has so far raised Rs 92.20 billion. It had raised a record Rs 1 trillion through divestment in 2017-18. At the end of 2017-18, the total resources of REC stood at over Rs 2.46 lakh crore, of which reserves were Rs 33,515.59 crore. The net worth of the company was Rs 35,490 crore and ‘cash and bank balance’ were Rs 1,773 crore at the end of March 2018.
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