Rural Electrification Corporation (REC) is a key lender to the Indian power sector. It is also the nodal agency for implementing the government’s flagship programme, Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), which seeks to ensure power supply to every village by March 2012. REC chairman JM Phatak discussed the progress of the scheme, as also the status of loan sanctions and disbursements. Excerpts:
You are the nodal agency for implementing the RGGVY scheme? How this scheme is being executed?
Under the programme, electrification work is undertaken by state electricity boards with the support of central utilities. The Centre provides 90% funding as grants and the balance is financed by REC through loans.
What is the progress of the scheme? Will all the villages get power supply by March 2012 as per the government plan?
We have already electrified about 90,000 villages and expect to cover the balance 30,000 by the end of this calender year. There is usually a three-month lag between electrification and energisation as electricity inspectors have to certify that power can be safely run in erected lines. So all the villages will be energised by March 2012.
What is the significance of the scheme from the point of rural growth?
The rural economy is growing at a faster pace than the urban economy, thanks to the central government’s National Rural Employment Guarantee Scheme, which has enhanced the purchasing power of rural areas. Electricity consumption should also grow at a corresponding pace in the rural areas, though the base may be relatively low. Electricity would spur economic activities in rural India and further accelerate growth.
How are loan sanctions and disbursements of the company progressing in the current financial year?
We have sanctioned Rs. 43,861 crore during the first three quarters, compared to Rs. 42,064 crore during the same period in the last financial year. Our disbursements have grown from Rs. 15,141 crore to Rs. 16,199 crore during the same period. Our disbursements will grow significantly during January-March, as more projects are finalised in the current quarter.
What is the composition of loan sanctions?
Of the total loans sanctioned by us up to December 31, 51% have gone to generation and 43% to the transmission and distribution sector. The balance was in short-term loans. In comparison, the shares of generation and transmission for the same period last fiscal was 56% and 35%, respectively.
What is the current growth rate in your loan disbursements?
Our disbursements are growing at an annual rate of 25%.
What is the share of private sector in your outstanding loans?
The private sector accounts for about 9% of our total outstanding loans
The private sector is to build 50% of the 100 gw addition during the 12th Plan. How will it impact your loan portfolio?
The private sector’s share could go up to 20% of our outstanding by March 2017.
How are REC’s growth prospects?
REC’s growth is India’s growth story. With the economy projected to grow at 8-8.5% over the long run, the power sector also needs to expand commensurately. That would entail adequate growth opportunities for REC.
You are the nodal agency for implementing the RGGVY scheme? How this scheme is being executed?
Under the programme, electrification work is undertaken by state electricity boards with the support of central utilities. The Centre provides 90% funding as grants and the balance is financed by REC through loans.
What is the progress of the scheme? Will all the villages get power supply by March 2012 as per the government plan?
We have already electrified about 90,000 villages and expect to cover the balance 30,000 by the end of this calender year. There is usually a three-month lag between electrification and energisation as electricity inspectors have to certify that power can be safely run in erected lines. So all the villages will be energised by March 2012.
What is the significance of the scheme from the point of rural growth?
The rural economy is growing at a faster pace than the urban economy, thanks to the central government’s National Rural Employment Guarantee Scheme, which has enhanced the purchasing power of rural areas. Electricity consumption should also grow at a corresponding pace in the rural areas, though the base may be relatively low. Electricity would spur economic activities in rural India and further accelerate growth.
How are loan sanctions and disbursements of the company progressing in the current financial year?
We have sanctioned Rs. 43,861 crore during the first three quarters, compared to Rs. 42,064 crore during the same period in the last financial year. Our disbursements have grown from Rs. 15,141 crore to Rs. 16,199 crore during the same period. Our disbursements will grow significantly during January-March, as more projects are finalised in the current quarter.
What is the composition of loan sanctions?
Of the total loans sanctioned by us up to December 31, 51% have gone to generation and 43% to the transmission and distribution sector. The balance was in short-term loans. In comparison, the shares of generation and transmission for the same period last fiscal was 56% and 35%, respectively.
What is the current growth rate in your loan disbursements?
Our disbursements are growing at an annual rate of 25%.
What is the share of private sector in your outstanding loans?
The private sector accounts for about 9% of our total outstanding loans
The private sector is to build 50% of the 100 gw addition during the 12th Plan. How will it impact your loan portfolio?
The private sector’s share could go up to 20% of our outstanding by March 2017.
How are REC’s growth prospects?
REC’s growth is India’s growth story. With the economy projected to grow at 8-8.5% over the long run, the power sector also needs to expand commensurately. That would entail adequate growth opportunities for REC.
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