Fund raising may be lower as distribution companies will pump money in Uday bonds: Rajeev Sharma, REC
Rural Electrification Corporation sees its fund raising requirement declining 2016-17 with state-run power distribution companies pumping back money raised through bonds issues under the UDAY scheme, Chairman and Managing Director Rajeev Sharma said.
“The bond issue by states under UDAY is giving us funds which we will utilize for further lending. Our borrowings in 2016-17 would be lower than 2015-16,” Sharma told ET at the sidelines of the launch of ET Energy World.
UDAY, or the Ujjwal Discom Assurance Yojana or UDAY was launched by the central government to facilitate the revival of discoms which have been struggling with losses and mounting debt. Jharkhand, Chhattisgarh, Rajasthan and even non-BJP rules states such as Uttar Pradesh have joined the scheme which is aimed at reducing their financial stress and improving efficiency.
Rajasthan issues bonds worth Rs 28,455 crore under UDAY scheme to 26 banks at an interest rate of 8.39%. Uttar Pradesh has raised around Rs 4,000 crore.
“Our cost of fund is 8.2% and we expect it to go down further after getting money from discoms,” he said.
Sharma said the company is in the process of setting targets for 2016-17 but expects the disbursal target to be higher the current fiscal.