Rural Electrification Corporation: Financing the Indian Power Infrastructure

Last Updated: January 20, 2017 

Inadequate Fuel Supply for Power Plants:

The thermal power plants in India, whether coal or gas fired, are struggling with inadequate supply of fuel and are operating at low Plant Load Factor (PLF). Country has the fourth largest coal reserves in the world, and despite of this, its domestic coal production has been unable to keep pace with the increase in coal demand posed by power plants. Under such situations the coal imports for power plants is expected to rise. There has been an unprecedented growth in renewable energy production causing a significant change in the fuel mix for power generation in the country.

Envisaged Generation Capacity Addition:

The targeted generation capacity addition in the 12^th Five Year Plan (FYP) is 88,537 MW for which the fund requirement is INR 14 lac crore. For the 13^th FYP (by the year 2022) the envisaged generation capacity addition, expecting a GDP growth of 9%, is 94,000 MW . Such a boost in generation capacity needs matching transmission and distribution capacity.

Transmission line addition of nearly 1,00,00 circuit km and sub-station capacity addition of 2,70,000 MVA has been planned in the 12^th FYP. 

Funding the various needs of infrastructure developments in Indian power sector:

The estimated fund requirement during the 12^th FYP for the Indian power sector alone is about 14,00,000 Crore INR. Rural Electrification Corporation (REC) is one of “Navratna” public sector companies in India and is funding the various needs of infrastructure developments in Indian power sector. REC has been financing power generation, transmission, and distribution projects along with rural electrification and irrigation pump energisation. 

The Corporation has been actively involved in the infrastructure development and improvement in the power sector with special emphasis on expansion and strengthening of existing transmission and distribution networks by financing investments in energy efficient transformers, energy meter, power factor improvement capacitors, High Voltage Distribution Systems (HVDS) etc. The company is also involved in sanctioning loans for Renovation and Modernization (R&M) of the existing power plants, grid connected renewable energy projects and village electrification.

Skill development and Up-gradation programmes by REC:

REC is also regularly conducting various skill development and up-gradation programmes, promoting non-conventional energy by installing solar PV smart mini-grids/solar lanterns, providing health care, potable water and sanitation. The company is further strengthening its activities in allied fields such as power equipment financing, energy efficiency promotion activities etc and providing significant contributions in the development of power sector and the society.