Financial Daily from THE HINDU group of publications
Saturday, Jul 27, 2002
Financial Daily from THE HINDU group of publications Saturday, Jul 27, 2002 |
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Industry & Economy
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Power REC enters full-scale funding of generation, transmission Our Bureau
NEW DELHI, July 26 RURAL Electrification Corporation (REC) has decided to fund generation and transmission projects of any size, thus easing itself out of the earlier restraint of having to finance only projects of 25 MW and below, besides sub-transmission projects in towns having a population of less than one lakh. This freedom in funding puts it in direct competition with the other power sector-specific financial institution, namely, Power Finance Corporation (PFC). This decision was taken at a recently held board meeting since it would enable REC to sustain funding of rural electrification projects with lesser Government support. The board, meanwhile, has also received the Power Ministry's nod to float an initial public offering (IPO) in the next five months. REC, which is wholly-owned by the Union Government, plans to float a domestic IPO of around Rs 200 crore. PFC has also submitted an 18-week schedule to float an IPO worth about Rs 300 crore for which the Centre's nod is awaited. REC, at its board meeting on July 24, also reduced the lending rates for both long-term and short-term loans to State power utilities by 0.5 per cent with immediate effect. The power sector-specific financial institution also decided to offer a rebate of 0.5 per cent on immediate payment of bills by the State utilities, thus bringing down its minimum lending rate to 9.5 per cent. At the meeting, the board decided to reschedule loan packages for defaulting States such as Assam, Bihar, Jharkhand, Madhya Pradesh and Uttar Pradesh. The packages envisage minimal cash outgo at the outset, major concessions in the 16-year tenure, besides diluted imposition of penal interest. On the loan agreement front, it has decided to rationalise the terms and conditions. The corporation has also decided to do away with processing fee, which amounts to one per cent of the loan amount, besides diluting the penalty clauses governing repayment of loans.
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