Cabinet Committee on Economic Affairs (CCEA) has given its in principle approval for strategic sale of Central Government’s existing 52.63% of total paid up equity shareholding in Rural Electrification Corporation (REC) to Power Finance Corporation (PFC) along with transfer of management control. Both REC and PFC are Central Public Sector Enterprises under the Ministry of Power.

Significance
The acquisition intends to achieve integration across Power Chain, create economies of scale, obtain better synergies 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 combined entity.

Rural Electrification Corporation (REC)
It is public Infrastructure finance company in India’s power sector. It finances and promotes rural electrification projects across India. It provides loans to Central/ State Sector Power Utilities, State Electricity Boards, Rural Electric Cooperatives, NGOs and Private Power Developers. It was founded in July 1969 and is headquartered in New Delhi.

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