POWER SECTOR

rec-ltd-raises-500-mn-bonds-first-cross-border-issuance-since-covid-19

REC Ltd raises $500 Mn Bonds; first cross border issuance since COVID-19

Navratna Central PSU Rural Electrification Corporation (REC Ltd) has opened up the USD markets for Indian issuers in the wake of COVID-19 crisis. With the global lockdown fears receding and liquidity coming back to the Asian markets, REC pulled the trigger and tapped the offshore debt markets on May 12, 2020 making it the first issuer from India since March 5, 2020.

 

The paper was strongly received by investors, with books rapidly crossing $ bn across Asia and Europe. US investors too came in strongly, with REC finally receiving subscription of more than 5 times the actual issue size, through 175 investors. The strong investor demand saw the issuance being upsized from the base size of 300m to 500m. The 3-year issuance was priced at a coupon of 4.75%.

 

The REC paper saw demand from high-quality long term investors and large global fund houses. Asia took the largest allocation at 68%, Europe Middle East & Africa (EMEA) 19%, and US at 13%. In terms of investor type, Fund Managers were allocated 52%, Insurance/PF 23%, Banks 16% and Private Banks 9%. Given the high demand, the issuance priced at nil New Issue Premium (NIP), comparing favorably to other global bond issuers who have had to pay significantly more NIP in recent deals.

 

Ajeet Kumar Agarwal, Chairman and Managing Director, REC Ltd said: “REC has effectively opened up the offshore debt market for other Indian credits to tap into. The strong reception to this deal demonstrates both resilience of the Indian economy among International investors and the high regard for REC’s credit quality.”

13 May 2020
ptc-celebrated-20th-annual-day:-free-power-regime-to-go-says-power-minister

PTC celebrated 20th Annual Day: Free power regime to go says Power Minister

Speaking on the 20th annual day celebration of the Power Trading Corporation (PTC), Union Power Minister (I/c) R K Singh, on Monday, said that the country was moving towards a new regime where a power consumer would pay first and then get power supplies. This would deal with the chronic and festering problem of dealing with the issue of nonpayment in the sector.

 

He made it clear that states can give free power to certain sections of the society but they would have to pay for it from their own budget.

 

He strongly condemned the prevailing notion and practice saying “there is no such thing as free power. Production of power involves huge investments’

 

He underlined the non-payment as one of the main reasons for the power sector stress which needs to be rectified at any cost. Without this, one cannot imagine a sustainable power regime which calls for an immediate connection between the payment and delivery. Many states would have to reconsider their stand.

 

Speaking on the occasion, PTC CMD Deepak Amitabh said the company has entered the 'adulthood' having completed the 'teenage' and the formative age spanning 19 years. Starting with a capital base of Rs five crores in 1999, it is now Rs 15,000 crores company.

 

And 'adulthood' has its own challenges. Since the country needs a judicious mix of power generated from various sources, the company has its task well cut out. Echoing the minister, he said the value of power has to be rationalized and pegged to the cost.

16 Jul 2019
rec-ltd-raises-500-mn-bonds-first-cross-border-issuance-since-covid-19

REC Ltd raises $500 Mn Bonds; first cross border issuance since COVID-19

By IndianMandarins 13 May 2020

Navratna Central PSU Rural Electrification Corporation (REC Ltd) has opened up the USD markets for Indian issuers in the wake of COVID-19 crisis. With the global lockdown fears receding and liquidity coming back to the Asian markets, REC pulled the trigger and tapped the offshore debt markets on May 12, 2020 making it the first issuer from India since March 5, 2020.

 

The paper was strongly received by investors, with books rapidly crossing $ bn across Asia and Europe. US investors too came in strongly, with REC finally receiving subscription of more than 5 times the actual issue size, through 175 investors. The strong investor demand saw the issuance being upsized from the base size of 300m to 500m. The 3-year issuance was priced at a coupon of 4.75%.

 

The REC paper saw demand from high-quality long term investors and large global fund houses. Asia took the largest allocation at 68%, Europe Middle East & Africa (EMEA) 19%, and US at 13%. In terms of investor type, Fund Managers were allocated 52%, Insurance/PF 23%, Banks 16% and Private Banks 9%. Given the high demand, the issuance priced at nil New Issue Premium (NIP), comparing favorably to other global bond issuers who have had to pay significantly more NIP in recent deals.

 

Ajeet Kumar Agarwal, Chairman and Managing Director, REC Ltd said: “REC has effectively opened up the offshore debt market for other Indian credits to tap into. The strong reception to this deal demonstrates both resilience of the Indian economy among International investors and the high regard for REC’s credit quality.”

ptc-celebrated-20th-annual-day:-free-power-regime-to-go-says-power-minister

PTC celebrated 20th Annual Day: Free power regime to go says Power Minister

By IndianMandarins 16 Jul 2019

Speaking on the 20th annual day celebration of the Power Trading Corporation (PTC), Union Power Minister (I/c) R K Singh, on Monday, said that the country was moving towards a new regime where a power consumer would pay first and then get power supplies. This would deal with the chronic and festering problem of dealing with the issue of nonpayment in the sector.

 

He made it clear that states can give free power to certain sections of the society but they would have to pay for it from their own budget.

 

He strongly condemned the prevailing notion and practice saying “there is no such thing as free power. Production of power involves huge investments’

 

He underlined the non-payment as one of the main reasons for the power sector stress which needs to be rectified at any cost. Without this, one cannot imagine a sustainable power regime which calls for an immediate connection between the payment and delivery. Many states would have to reconsider their stand.

 

Speaking on the occasion, PTC CMD Deepak Amitabh said the company has entered the 'adulthood' having completed the 'teenage' and the formative age spanning 19 years. Starting with a capital base of Rs five crores in 1999, it is now Rs 15,000 crores company.

 

And 'adulthood' has its own challenges. Since the country needs a judicious mix of power generated from various sources, the company has its task well cut out. Echoing the minister, he said the value of power has to be rationalized and pegged to the cost.

power-inefficiency-costs-india-4%-of-gdp:-world-bank-report

Power inefficiency costs India 4% of GDP: World Bank Report

By IndianMandarins 23 Dec 2018

Efficiency gap in the country’s power sector costs the economy 04 per cent of GDP every year. This amounted to a total loss equivalent to $86 billion in FY 2016. India was at the 80th spot among 137 economies in the reliability of electricity supply as per the 2018 Global Competitiveness Report.

 

Analyzing the consequences of this loss, a recently-released World Bank report points out that the income of rural households in the country can be increased by $09.40 billion and business losses worth USD 22.70 billion can be eliminated with 24 hours access to power supply.

 

Much of the energy inefficiency is attributed to the shortage of coal supply, which was as high as 14% in FY2016, says the report.

 

The report says that electricity subsidies provided by the government and inefficient power generation, transmission, and distribution of power play a major role in power shortages. In 2016, around 20% of electricity generated was lost during transmission and distribution. This is the highest loss rate in the world. Report further adds that industrial electricity tariffs become less affordable and competitive due to power subsidies to households and farmers.

 

The report recommends reforms in the electricity sector to restore market pricing and improve efficiency. This will complement traditional investments to increase power supply and expand access to reliable electricity.

 

Reliable access to electricity will have a positive impact on Gender Equality by increasing women’s employment and girls’ study time. It will lead to lower use of kerosene lamps which would improve health and the environment.

 

Coal allocation and delivery need to be more efficient and competition in coal and electricity supply needs to be encouraged. Energy prices should be rationalized to reflect the actual cost of supply. Incentives should be given for the promotion of more efficient power generation and delivery.

 

Social assistance should be provided to help people deal with higher energy prices. India has made great progress in expanding access to power in recent years. However, many people still lack access to electricity and power shortages harm the economy and consumer well-being.

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