Power Finance Corp (PFC) and REC are currently drafting a strategic framework designed to help the central government maintain its majority control within these entities. The move aims to ensure ownership stability without placing an undue strain on public finances.
The institutions are weighing two primary financial mechanisms to achieve this goal. The first option involves the issuance of preference shares priced at ₹10, an approach that would require an estimated outlay of ₹800 crore. Alternatively, the government could subscribe to non-tradable bonds valued at approximately ₹24,000 crore.
Financial advisors involved in the discussions appear to favor the preference share route. Analysts suggest that this method is significantly more cost-effective compared to the long-term, recurring interest obligations associated with large-scale bond subscriptions.
As these state-run power financiers navigate the transition, the focus remains on optimizing capital efficiency. By avoiding high-interest debt instruments, the companies aim to safeguard their balance sheets while fulfilling the government's mandate for majority retention.
