REC eyes 26% stake in coal mines, merchant power plants

The state-run Rural Electrification Corporation (REC), which finances rural power projects in the country, is keen to pick up 26 per cent stake in coal mines and merchant power plants.

However, the company wants an option to sell the stake with a premium after five years in any such equity purchase.

"We are ready to pick up 26 per cent stake in coal mines and merchant power plants but with the option of exit route after five years at a premium," a company official said here today, adding the company is open to investing in power projects with both private and public sector companies.

Power companies are scouting for coal mines to secure fuel supply for their projects. "In the next three years there is going to be great demand for coal mine acquisition," the official said.

Merchant power projects sell their output in the open market as they do not normally tie up with distribution companies in advance to sell the power they generate.

REC is also gearing up to raise Rs 3,300 crore through its follow-on public offer in February. The offer would comprise five per cent stake dilution by the government and issuance of 15 per cent fresh equity by the company.

Post-FPO, the government’s share in REC would come down to nearly 66 per cent from the present 81.82 per cent.