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Power Min considers proposal to sell entire govt stake in PFC to REC

twitter-logo PTI        Last Updated: November 28, 2018  | 22:03 IST

New Delhi, Nov 28 (PTI) The power ministry is considering a proposal under which state-run REC Ltd will buy entire 65.6 per cent government stake in Power Finance Corporation (PFC) for around Rs 16,000 crore at present market value, a move would ultimately help the Centre meet its divestment target, a source said. "A proposal to sell entire government stake (65.6 per cent) in state-run PFC to REC Ltd is under consideration of the power ministry. After the divestment, the REC would take over the PFC and both firms would be merged as one entity i.e REC Ltd," a source said. The source further said, "The power ministry has firmed up the proposal after Department of Investment and Public Asset Management (DIPAM) had asked the ministry to explore possibility of merge and acquisition among state-run firms under ambit of this ministry." The source also said, "Once the proposal is firmed up, the ministry would sent that to the DIPAM. After that a proposal would be prepared for approval of the Union Cabinet." At present the government has mopped up over Rs 15,000 crore so far this fiscal through PSU disinvestment, which includes about Rs 5,300 crore from Coal India share sale and Rs 1,700 crore from IPOs of four PSUs -- RITES, IRCON, MIDHANI and Garden Reach Shipbuilders. The budgeted target from PSU disinvestment is Rs 80,000 crore for the current fiscal. The source said,"Both DIPAM and Power Ministry have been discussing issues surrounding merger and acquisition of power sector state-run firms to garner more funds which would help government meet its disinvestment target." At the current share price, the 65.6 per cent government stake sale in PFC would fetch around Rs 16,000 crore. At the end of 2017-18 financial year, the total resources of the REC stood at over Rs 2.46 lakh crore, of which 'reserves and surplus' stood at Rs 33,515.59 crore. Net worth of the company stood at Rs 35,490 crore and 'cash and bank balance' was at Rs 1,773 crore at the end of March 2018. Finance Minister Arun Jaitley had in Budget 2017-18 said there are opportunities to strengthen CPSEs through consolidation, mergers and acquisitions. "By these methods, CPSEs can be integrated across the value chain of an industry. It will give them capacity to bear higher risks, avail economies of scale, take higher investment decisions and create more value for the stakeholders, he had said. PTI JD KKS MKJ

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