The Cabinet Committee on Economic Affairs (CCEA) has given an in-principle approval for the strategic sale of 52.63 per cent stake in Rural Electrification Corporation to Power Finance Corporation along with transfer of management control.

According to the present evaluation, this deal is expected to fetch the exchequer around ₹15,000 crore. This transaction will help the government meet its ₹80,000-crore disinvestment target for this fiscal.

This is in line with Finance Minister Arun Jaitley’s Budget announcement of integrating PSUs in the same line of business. The transaction will be through the acquisition route.

Speaking to reporters after the decision, Jaitley said, “It was announced in the Union Budget that if there are multiple public sector undertakings operational in the same space, we will adopt a merger, acquisition or takeover model for consolidation. For this transaction, PFC will be acquiring REC…REC will become a PFC subsidiary.”

“This is as per the proposal of the Ministry of Power,” he added. The modalities will be worked out by the alternative mechanism — a committee headed by the Finance Ministry.

As at September-end, the government held 57.99 per cent in REC, and 65.64 per cent in PFC.

But the government holding in REC came down to 52.63 per cent after stake-sale through exchange-traded funds (ETFs).

Next on the radar

Officials said that next on the radar is the merger of NTPC and SJVN Ltd. While NTPC is keen on the deal, the Himachal Pradesh government expressed apprehensions fearing that the focus of the company will get diluted.

The first such integration was of Hindustan Petroleum Corporation with ONGC.

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