Rural Electrification Corporation (REC) was incorporated on July 25, 1969 under the Companies Act, 1956. REC is a listed Government of India Public Sector Enterprise with a net worth of Rs 5368 crore.
The company’s main objective is to finance and promote rural electrification projects all over the country. It provides financial assistance to state electricity boards, state government departments and rural electric cooperatives for rural electrification projects as are sponsored by them.
REC provides loan assistance to SEBs/state power utilities for investments in rural electrification schemes through its corporate office located at New Delhi and 17 field units (project offices), which are located in most of the sates. The project offices in the states coordinate the programmes of REC’s financing with the concerned SEBs/state power utilities and facilitate in formulation of schemes, loan sanction and disbursement and implementation of schemes.
The company is nodal agency that is in charge of Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) launched by the government of India. Under this programme the GOI aims to provide electrification to 1.15 lakh villages across India. Under this scheme GOI will funds 90% of the programme by way of grants and rest 10% would be provided by REC as a loan.
The corporate office is located at New Delhi and seventeen fully staffed project offices are located in different states of the country, apart from one training institute viz. Central Institute for Rural Electrification at Hyderabad. To focus attention on human resources development, the corporation has been sponsoring its executives and non-executives to specialised training programme conducted by various agencies and overseas organisations of repute. As on November 11, 2008 it has on its roll 681 employees, which comprises 349 executives from different disciplines viz. engineering, finance, economic and specialised cadres and 332 non-executives.
REC Power Distribution company is subsidiary of the company. The company has entered into a joint venture with IDFC to enter in area of power distribution and consultancy.
Generation - REC finances all types of power generation projects like thermal, hydel, renewable energy, R&M of existing projects etc. The borrowers of REC include state sector power utilities/SEBs, central sector, joint sector and private sector power utilities. Up to May 2002, the company used to finance only mini/micro generation projects upto 25 MW capacity. In June 2002, the mandate of REC was expanded to include financing of all generation projects without limit on size or location.
As per the present policy, loans for public sector generation projects are sanctioned up to a maximum of 80% of project cost i.e. in a debt-equity ratio of 80:20 but up to the exposure limit fixed for the power utility. For private sector projects, the financing by REC is limited upto 50% of the project cost or 25% of the net worth of REC, whichever is less. The tenure of loans for generation projects varies between 10 to 15 years with a suitable moratorium period depending upon a case-to-case basis.
With a modest beginning in 2002-03, when projects worth Rs 736 crore were sanctioned, REC till 2008-09 has sanctioned generation projects worth Rs 79,772 crore.
REC has formed a separate division for DDG projects which looks after the sanction of loan for small hydro, biomass, wind energy, solar and co-generation power projects. Major projects sanctioned so far by REC in state sector include Santaldih TPP in West Bengal, Lehra Mohabbat TPP in Punjab, Korba(East) and Korba (West) TPPs in Chhattisgarh, Vijaywada and Kakatiya TPP in Andhra Pradesh, Bhusawal and Chandrapur TPP in Maharashtra, Tehri HEP in Uttaranchal, Utran TPP in Gujarat, Durgapur Steel TPP of DVC, Baglihar HEP in J&K, Anpara-D TPP in Uttar Pradesh, Vallur and North Chennai TPP in Tamilnadu, Chhabra TPP in Rajasthan, Nabinagar Thermal Power Project in Bihar, etc.
Major promoters in private sector have also approached REC for finance. In the private sector, the company has sanctioned loans for Karcham Wangtoo HEP in Himachal Pradesh, Sasan Ultra Mega Power Project, Mahan Superthermal Power Project and Maheshwar HEP in MP, Pathadi TPP in Chhattisagarh, Wardha TPP in Maharashtra, Adani thermal Power Project in Gujarat, Teesta Stage-III and VI HEP in Sikkim, etc.
Some of the promoters have even approached REC for taking up the role of lead financier in a consortium. At present, REC is acting as lead financier in 100 MW Malana-II Hydro Electric Project in HP, the 1200 MW Teesta Phase-III Hydro Electric Project in Sikkim, the 270 MW phase-I and 270 MW Phase-II coal based thermal power project of Wardha Power Company Private Limited in Maharashtra, the 1200 MW Anpara-C Thermal Power Project in Uttar Pradesh and the 1320 MW coal-based thermal power project of Thermal PowerTech Corporation (India) in Andhra Pradesh.
Transmission and Distribution - The company offer financial assistance to power utilities in the country in T&D sector. REC also appraises and sanctions T&D schemes posed to REC for financing, monitoring T&D schemes and evaluate impact of T&D schemes. The T&D programme has so far been the single major contributor to the business of REC.
Sanction and disbursement of T&D division by REC in the year 2003-04 stood at Rs 5117 crore and Rs 3599 crore respectively. The number increased to Rs 15032 crore of sanction and Rs 6662 crore of disbursement in 2007-08.
To overcome the system deficiencies and to improve the quality and reliability of power supply, REC finances system improvement schemes, based on system studies of an electrical distribution network considering present status of system capacities, connected demand, voltage profiles and level of losses, together with scope for future load growths.
REC started a programme to provide funds for schemes for energisation of pumpsets, in order to facilitate agriculture and till March 2007, loan assistance of Rs. 5616 crore has been sanctioned.
The Accelerated Power Developments and Reforms programme (APDRP) was launched by the GOI in 2001-02. The MOP sanctions the schemes based on the recommendations of the concerned Advisor cum Consultants (AcCs), who formulate the DPRs for the utilities. The role assigned to REC regarding this programme is extending counterpart funding to the states (which was 50% of project cost earlier, but now revised to 75%), based upon the sanction of MOP. Since the launch of the programme, REC has provided counterpart funding for 318 schemes involving a loan assistance of Rs. 4011 crore.
International Cooperation & Development- In view of the growing need to diversify the resource base of REC, a dedicated IC&D Division was set up in July 2004 to coordinate with multilateral agencies for tying up project based funds on concessional terms and to forge partnerships with international agencies for sharing international best practices. So far, External Assistance of about 42000 million JPY & 140 million Euro has been tied up with Japan International Cooperation Agency (JICA) & Kreditanstalt fur Wiederaufbau (KfW) respectively through four Lines of credit.
The company acts as a financial intermediary between external funding agencies and the project implementers for securing Official Development Assistance (ODA) and other funds for financing eligible power sector projects. It assists project implementers in formulation of project proposals as per requirement of MoP/MoF and external agencies.
REC arranges GoI Guarantee for securing ODA financing and borrows in foreign currency and to on lend in domestic currency, thereby absorbing risks of foreign currency fluctuations.
The company acts as a nodal agency for overseeing project implementation as per norms of external agencies and to monitor the impact of the project on completion