The government has proposed that Power Finance Corp acquire REC in a Rs 14,000-crore deal, a surprising reversal of the previous plan of REC taking over PFC. The deal would require approval of the Cabinet, which may consider the proposal on Wednesday, sources familiar with the development said. The proposal, which is similar to Oil & Natural Gas Corp’s acquisition of Hindustan Petroleum Corp last fiscal year, is part of the government’s Rs 80,000-crore disinvestment target, of which it has been able to mobilise only Rs 32,247 crore so far in fiscal 2018-19.
Until last week, the government was considering acquisition of PFC by REC followed by a merger, since it would have fetched more money given the government’s larger stake in the former, which also has a higher market value. The change in the proposal is backed by feedback from within government departments, including the administrative power ministry, sources said.