REC expects disbursement to grow a quarter in FY12

The state-run lender Rural Electrification Corp expects its disbursement to jump by a quarter in 2011/12 on rising loans demand from the power sector.

"There will be a large requirement of funds for setting up power projects and also a matching demand for funds in the transmission and distribution business next fiscal," HD Khunteta, director (finance), told reporters on Thursday.

India aims to add about 100 gigawatts (GW) of power generation capacity by early 2017, despite conceding it would miss by 79% an earlier five-year target of adding 78.7 GW by March 2012.

REC, which finances electricity projects, expects its disbursement to rise to more than Rs 25,000 crore, borrowing to grow to Rs 28,000-30,000 crore and loan sanctions to top Rs 50,000 crore in 2011/12,, Khunteta said.

The company's disbursement in 2010/11 may be 10-15% higher on the year, Khunteta said. As of December 31, it has disbursed about Rs 16,000 crore and sanctioned loans worth Rs 43,000 crore in the current fiscal.

The company is planning to raise Rs 2,000 crore through sale of bonds, including Rs 1000 crore of infrastructure bonds by March, Khunteta said.

It is also in talks with investors to raise about USD 250 million in overseas loans after having just raised USD 500 million through overseas bond issue, Khutenta said.

The bonds, which were sold at a fixed coupon of 4.25%, got almost three times subscribed, attracting more than 150 investors, the company said.

REC, valued at Rs 27,200 crore, closed 2.16% up at Rs 281.05 in a Mumbai market that closed up 0.36%.