The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi has given its ‘In Principle’approval for strategic sale of the Government of India’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.

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

Both REC and PFC are Central Public Sector Enterprises under the Ministry of Power.

Strategic sale of government shareholding in REC to PFC advances power sector integration and financing synergies. The central executive approved an in-principle Strategic Sale of the government's majority equity in REC to PFC with accompanying Transfer of Management Control, transferring managerial authority from the government to the acquiring Central Public Sector Enterprise; the transaction is intended to integrate financing across the power chain, realise synergies and economies of scale, enhance capability to support energy access and efficiency, and improve fundraising terms for the combined entity.