Rural Electrification Corporation

[1]
Rural Electrification Corporation Limited (REC)
is a leading public Infrastructure Finance Company in
India’s power sector. The company finances and pro-
motes rural electrification projects across India, operat-
ing through a network of 13 Project Offices and 5 Zonal
Offices, headquartered in New Delhi. The company pro-
vides loans to Central/ State Sector Power Utilities, State
Electricity Boards, Rural Electric Cooperatives, NGOs
and Private Power Developers.
REC is a Navratna Company[2] functioning under the
purview of the Ministry of Power – Government of India.
The company is listed on both National Stock Exchange
of India and Bombay Stock Exchange.
The company is currently among the top 500 Global Fi-
nancial Services brands by UK-based plc Brand Finance
(Brand Finance @ Global Banking 500 for 2010).[3] The
company is also among the Forbes Global 2000 compa-
nies for 2010.[4]

1 Business Operations[5]

1.1 Services Provided

The company is primarily engaged in providing finance

for rural electrification projects across India and pro-
vides loans to Central/ State Sector Power Utilities, State
Electricity Boards, Rural Electric Cooperatives, NGOs
and Private Power Developers. The company sanctions
loan as a sole lender or co-lender or in consortium with
REC’s business model spans across the value chain of or without the status of lead financer. It also provides
power infrastructure financing including consultancy, project monitoring and financial/ technical
(a) equipment finance, appraisal support for projects, also in the role of nodal
(b) technical/ financial appraisal of project, agency for Government of India schemes or projects.
(c) project finance as well as short term or bridge loans for
generation, intensive electrification, transmission, distri-
bution, repair and maintenance, 1.2 Projects
(d) support functions like project monitoring, consultancy
and advisory. REC finances all types of Power Generation projects in-
The company operates autonomously as a Central Public cluding Thermal, Hydel, Renewable Energy, etc. without
Sector Enterprise under the Ministry of Power,[6] Gov- limit on size or location. The company aims to increase
ernment of India and also acts as nodal agency for expan-
presence in emerging areas like de-centralised distributed
generation (DDG) projects, and new and renewable en-
sive Government of India schemes for building electricity
infrastructure. ergy sources to reach remote and difficult terrains not
Business operations in India are supported by a network connected by power grid network.
of 19 offices headquartered in New Delhi. In Transmission & Distribution (T&D), REC is pri-

1
2 2 HISTORY[8]
marily engaged in ascertaining financial requirements of
power utilities in the country in the T&D sector along
with appraising T&D schemes for financing. REC has fi-
nanced T&D schemes for system improvement, intensive
electrification, pump-set energisation and APDRP Pro-
gramme. The company is also actively involved in phys-
ical as well as financial monitoring of T&D schemes.
REC also offers loan products for financing Renewable
Energy projects. The company has tied up a line of credit
for €100M (approximately ₹6000M) with KfW under
Indo-German Development Cooperation for financing
renewable energy power projects at concessional rates of
interest. Eligible projects include Solar, Wind, Small Hy-
dro, Biomass Power, and Cogeneration Power & Hybrid
Projects.
1.3 Resource Mobilisation
REC raises funds through various domestic and inter-
national sources, including Commercial Banks, Capital
Gain Tax Exemption Bonds, Non-Priority Sector Bonds
& Commercial Paper, and Official Development Assis-
tance loan from international agencies. International col-
laborations have included past tie-ups for External Com-
mercial Borrowings with Standard Chartered Bank (Lon-
don), DEPFA Investment Bank Limited (Cyprus)[7] etc.
as well as current tie-ups with KfW (Germany) and Japan
International Cooperation Agency (Japan) under Official
Development Assistance. As an IFC, REC can also is-
sue Infrastructure Bonds and raise funds up to US$500M
through External Commercial Borrowing in a year.
Domestic debt instruments of REC are assigned the started extending loans to manufacturers of T&D equip-
highest rating “AAA” by reputed credit rating agencies ment.
CRISIL, Fitch and ICRA. Moody’s and Fitch have rated
its international credit rating at par with India’s sovereign
rating.
1.4 IPO & FPO
The Company was listed on the National Stock Exchange
of India and the Bombay Stock Exchange on 12 March
2008. REC went for Initial Public Offer of 156,120,000
Equity Shares in February 2008 which was oversub-
scribed by about 27 times, raising a total amount of
₹819 crores. Further Public Offer of 171,732,000 eq-
uity shares was made in February 2010. The issue was
oversubscribed by 3.14 times, raising a total of ₹26.47
billion
2 History[8]
2.1 Time-line
2.2 Early years
REC was set up in July 1969, in the backdrop of a criti-
cal drought situation facing India in the late sixties. The
company’s initial mandate was mainly to help State Elec-
tricity Boards energise pump-sets across the country to
boost agriculture and overcome the crippling impact of
three successive years of deficient monsoons. The com-
pany also provided finance to accelerate the pace of ru-
ral electrification in the overall context of planned pro-
grammes for increased agricultural production. Besides
finance, REC also offered appraising, consultancy, tech-
nical support and monitoring of projects, to assist State
Electricity Boards/Power Utilities, Rural Electric Coop-
eratives and other such institutions.
2.3 Post-Liberalised India (1990s)
Liberalisation by the Government of India (GoI) in 1991
saw introduction of amendments to existing laws and re-
form measures enabling the private sector to participate
in large-scale in manufacturing industry, services indus-
try and infrastructure. Sectors like power, airports, sea-
ports, roadways, projects were identified for private par-
ticipation, and nodal agencies were set up to do the ini-
tial spade work and later hand over such projects to pri-
vate players through competitive bidding routes. In April
2006, GoI identified 14 transmission projects worth ₹200
billion for development by 2012. REC was identified as
one of the two GoI-appointed nodal agencies for transfer-
ring identified projects to private developers. REC also
2.4 2000–Current
Till 2000, REC focused on the Transmission and Dis-
tribution aspect of power, with projects for household
electrification in rural and semi-urban areas, area elec-
trification in tribal/ dalit areas, intensive electrification,
and system improvement projects based on strengthening
and improving transmission, sub transmission and distri-
bution systems. REC’s portfolio of Generation projects
constituted mainly Mini/Micro Generation Projects up to
25MW capacity till 2000. In June 2002, the mandate of
REC was expanded to include financing of all generation
projects without limit on size or location. Today, financ-
ing of Generation projects has become a major thrust-
area of operations for REC, also attracting majority of its
private sector borrowers.
REC has systematically diversified into new and emerg-
ing areas of potential in the power business, and is to-
day a major player in India’s power financing business
with robust presence in all three functional areas of the

power sector: generation, transmission and distribution. ties and challenges in the field of Transmission & Distri-
In coming years, REC plans to invest heavily on financ- bution, including consultancy and monitoring.
ing of New and Renewable Energy, De-centralised Dis-
tributed Generation (DDG) and modernisation of T&D
systems for optimisation of reliable power supply to re- 6 Energy Efficiency Services Lim-
mote/ difficult rural and urban areas including hill, desert,
tribal, riverine areas etc.
3 Rajiv Gandhi Grameen Vidyu-
tikaran Yojana (RGGVY)
Since 2005, REC has been appointed nodal agency by
Ministry of Power for Government of India scheme Ra-
jiv Gandhi Grameen Vidyutikaran Yojana[13][14] aimed
at building rural electricity infrastructure and household
electrification towards the National Common Minimum
Programme goal of access to electricity for all. Under
the scheme, 90% capital subsidy is provided by Govern-
ment of India for overall cost of projects. Cumulatively
till FY10, works in 190,858 villages have been completed
and free connections to over 10 million below poverty line
(BPL) households have been released.
3.1 Rural Electrification Status
4 Central Institute for Rural Elec-
trification (CIRE)[16]
In 1979, REC established a national training institute
in Hyderabad for the development of techno-managerial
skill and efficiency in State Electricity Boards (SEBs),
Distribution Companies, Rural Electric Cooperatives and
other Power Utilities, and also to conduct in-house train-
ing programmes for REC’s employees. CIRE also served
as a platform for association with other institutions to-
wards a common goal of Rural Electrification (RE) and
rural energy development.
Today, CIRE conducts regular programmes on various
aspects of Transmission and Distribution for national and
international executives in the power sector, including
seminars participated by both private and public utili-
ties. Programmes focus on adoption of innovative and
cost effective modern technologies, training in both con-
ventional and non-conventional energy areas and practical
demonstrations via an in-house Energy Park.
5 Subsidiaries
REC has set up wholly owned subsidiaries viz. REC
Transmission Projects Company Limited (RECT- [10] “IFC status to help REC lend more to private sector”.
PCL) and REC Power Distribution Company Lim- Business-standard.com. 21 September 2010. Retrieved
ited (RECPDCL) with a view to pursue new opportuni- 3 February 2011.
3
ited (EESL)
EESL is a joint venture (JV) with 4 power PSUs – REC,
Powergrid, NTPC, and PFC for implementing energy ef-
ficiency projects, promoting usage of energy efficient ap-
pliances, promoting the concept of Energy Service Com-
panies (ESCOs) etc.
7 Indian Energy Exchange (IEX)
REC is an equity partner in Indian Energy Exchange
(IEX), India’s first nationwide, automated, and online
electricity trading platform (power exchange/ electricity
market), among other reputed investors like IDFC,
Adani, Reliance Energy, Lanco and Tata Power.
8 Recent Awards
9 References
[1] “Rural Electrification Corporation” (PDF). rec.nic.in.
Retrieved 16 July 2012.
[2] “List of Navratna CPSEs”. Dpe.nic.in. 30 November
2010. Retrieved 3 February 2011.
[3] “The Global Banking 500 League Table”. Brandirectory.
Retrieved 3 February 2011.
[4] “The Global 2000”. Forbes.com. 1 March 2010. Re-
trieved 3 February 2011.
[5] http://content.indiainfoline.com/Admin/ResearchPdf/
384499217_LS_Power_Financing_Electrifying_India_
220210.pdf
[6] “Rural Electrification Corporation”. Powermin.nic.in.
Retrieved 3 February 2011.
[7] http://www.recindia.nic.in/download/Chairman_
Speech06_07.pdf
[8] http://www.ieema.org/pdfs/Annual%
20Convention28-32634243746695820000.pdf
[9] “PSU INDIA – The first server to Public Sector Units,
servers to the nation : PSU News, Policy News, Vendor
news, PSU Stock News, PSU stock market, PSU Tenders,
PSU Jobs, Corporate Social Responsibility from the PSU
INDIA”. Psuindia.in. Retrieved 3 February 2011.
4 10 EXTERNAL LINKS

[11] “IFC_STATUS” (PDF). recindia.nic.in. Retrieved 3

February 2011.

[12] “REC gets additional lending exposure with IFC status”.

Psuindia.in. 20 September 2010. Retrieved 3 February
2011.

[13] “Rajiv Gandhi Grameen Vidyutikaran Yojana”.

Rggvy.gov.in. Retrieved 3 February 2011.

[14] “Record” (PDF). powermin.nic.in. Retrieved 3 February

2011.

[15] http://www.cea.nic.in/reports/monthly/dpd_div_rep/
village_electrification.pdf

[16] “About_CIRE” (PDF). recindia.nic.in. Retrieved 3

February 2011.

[17] http://www.indiapower.org/ipa2010/indiapawardie.pdf

[18] “Dainik Bhaskar Group Felicitates Winners of India Pride

Awards 2010 " Best Media Info, News and Analysis on In-
dian Advertising, Marketing and Media Industry”. Best-
mediainfo.com. 14 September 2010. Retrieved 3 Febru-
ary 2011.

[19] “18 awards to PSUs – DSIJ Awards 2010 | Corporate

News India and Corporate Affair News India”. Image-
mentors.com. 7 April 2010. Retrieved 3 February 2011.

[20] “asiapacifichrmcongress”. asiapacifichrmcongress. Re-

trieved 3 February 2011.

[21] “News – Hindi News – India News – News in Hindi –

News Headlines – Breaking News – Daily News – Hindi
News Papers – Local News”. Bhaskar.com. 9 October
2009. Retrieved 3 February 2011.

[22] ":: SCOPE : Press Releases”. Scopeonline.in. Retrieved

3 February 2011.

10 External links
• official website
 5

11 Text and image sources, contributors, and licenses

11.1 Text
• Rural Electrification Corporation Source: https://en.wikipedia.org/wiki/Rural_Electrification_Corporation?oldid=679119606 Contrib-
utors: Bgwhite, SmackBot, Chris the speller, Ohconfucius, Amartyabag, Khazar, Shyamsunder, White Ash, Cydebot, PKT, Indian-
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Anonymous: 12

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