A merger between Rural Electrification Corporation Ltd. and Power Finance Corporation Ltd. will be beneficial for the shareholders of REC, its Chairman and Managing Director PV Ramesh said.
He, however, specified that the company hasn't received any communication of such a deal. “We don't have any knowledge of what is being said in the media,” Ramesh told BloombergQuint in an interview. Hypothetically, if such a merger was to take place, there would be multiple synergies between the two power-sector lenders, he said.
“The government is the majority shareholder of the company so whatever decision they take would be in favour of shareholders, nation and development,” he said. “But this is just a speculation.”
On Nov. 28, Bloomberg reported that the government of India is considering a proposal to combine two state-run lenders to utilities as it seeks to raise funds to bridge a budget gap.
The government has spent Rs 1,30,000 crore to strengthen the delivery of power distribution system through Deen Dayal Upadhyaya Gram Jyoti Yojana, Saubhagya and Integrated Power Development Scheme, Ramesh said, adding that this includes modernisation of the distribution network as well as the electrification of every single household in the country. This will require massive lending to the power sector, he said, suggesting the need for a larger lender.
Watch the entire conversation here:
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