REC, PFC shares surge near 4%, as Union Cabinet approves Rs 3 lakh cr power distribution scheme

As the Union Cabinet approved over Rs 3 lakh crore power distribution scheme, the shares of REC (Rural Electrification Corporation) and PFC (Power Finance Corporation) each surged almost four per cent to Rs 149 and Rs 129 per share respectively on the BSE at the market close on Wednesday. 

Both the state-owned companies’ shares were trading flat till 11:00 am, however, both REC and PFC picked up momentum to surge over five per cent each on the intraday basis to Rs 150.95 and Rs 130.3 per share respectively, which is also their day’s high level. 

See Zee Business Live TV Streaming Below:

Both REC and PFC have been nominated as nodal agencies for facilitating the implementation of this new scheme approved by the cabinet on Wednesday. 

The Ministry of Power in a statement said, “The Cabinet approved a power distribution scheme that seeks to improve the operational efficiencies and financial sustainability of all PSU DISCOMs and power departments by providing conditional financial assistance to strengthen supply infrastructure.” 

The scheme will have an outlay of Rs.3,03,758 crores with an estimated GBS from the union government of Rs 97,631 crore, the power ministry said further adding that it be available till the year 2025-26.  

The primary objective of the scheme besides strengthening the distribution sector is a reduction of AT&C losses to pan-India levels of 12-15 per cent by 2024-25 and also slashing ACS-ARR gap to zero by 2024-25, the ministry also said in its release. 

Power Finance Corporation Ltd is the financial backbone of India’s power sector, which falls under the Ministry of Power, moreover, REC is a subsidiary of PFC, which finances and promotes rural electrification projects across India.