This comes against the backdrop of the government using power sector lenders such as PFC and REC Ltd to instil financial discipline at state-owned electricity distribution companies (discoms).
“The inter-ministerial committee has cleared PFC for Maharatna status. The official notification is expected to be issued in about 10 days,” said one of the two people mentioned above, requesting anonymity.
A CPSE should have a Navratna status, be listed on an Indian stock exchange, and have an average annual turnover and net profit of ₹25,000 crore and ₹5,000 crore, respectively, over the previous three years for it to be awarded Maharatna status, according to the government.
The buyout of the government’s entire stake in REC Ltd by PFC in 2019 cleared the decks for the $80 billion lending institution.
Power Finance Corp. Ltd (PFC) is set to become the 11th Maharatna central public sector enterprise (CPSE), with an inter-ministerial committee clearing the Navratna last week for this, said two people aware of the development.
The Maharatna dispensation was ushered in by the Union government for mega CPSEs to become global giants. PFC, India’s largest non-banking financial company (NBFC) and among the 14 Navratna CPSEs, can invest up to ₹5,000 crore, or 15% of its net worth, in a single project apart from being granted enhanced powers by the government for undertaking mergers and acquisitions once it gets the Maharatna status. Navratna and Miniratna CPSEs can invest up to ₹1,000 crore and ₹500 crore, respectively.
The 10 Maharatna CPSEs at present are Bharat Heavy Electricals Ltd, Bharat Petroleum Corp. Ltd, Coal India Ltd, GAIL (India) Ltd, Hindustan Petroleum Corp. Ltd, Indian Oil Corp. Ltd, NTPC Ltd, Oil & Natural Gas Corp. Ltd, Power Grid Corp. of India Ltd, and Steel Authority of India Ltd. There are 14 Navratna and 73 Miniratna CPSEs.
Queries emailed to the spokespersons of PFC and the Union power ministry late on Sunday night remained unanswered till press time.
PFC registered a 34% increase in net profit for the quarter ended 30 June to ₹2,274 crore. REC Ltd registered a 22% increase in its net profit to ₹2,247 crore for the quarter. The Cabinet Committee on Economic Affairs recently approved the marquee ₹3.03 trillion power discom reform scheme, under which the Centre will bear a burden of ₹97,631 crore. The funds will be released to discoms, subject to them meeting reform-related milestones, with REC and PFC nominated as nodal agencies for the scheme’s implementation.
This assumes importance as the reforms-based power distribution sector scheme aims to reduce India’s aggregate technical and commercial (AT&C) loss to 12-15% from 21.83% in 2019-20, and gradually narrow the deficit between the cost of electricity and the price at which it is supplied to zero by 2024-25. PFC recently sold €300 million worth of bonds, the first euro-denominated green bond issued from India. PFC’s expected elevation also comes at a time that economic activity in the country is reviving and the country’s electricity demand is on an upward trajectory. India’s peak electricity demand recorded an all-time high of 200.57 gigawatts (GW) on 7 July. India has an installed power generation capacity of 383.37 GW, and the demand is 192-193 GW.
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