REC Signs Substantial MoUs for Projects in MP and UP
Rural Electrification Corporation Ltd. (REC Ltd.) has stated in a stock filing dated 13th January 2023 that it has signed Memoranda of Understanding (MoUs) with the governments of Madhya Pradesh and Uttar Pradesh. MoUs signed with MP Government have a value of Rs. 21,086 crore, while those signed with UP Government add up to worth over Rs. 1 lakh crore.
These MoUs were signed at the MP Global Investors Summit 2023, Indore and at UP Global Investors Summit, Delhi.
REC Signs 3 MoUs for the Power Sector at MP Global Investors Summit
In a press release dated 11th January 2023, REC stated that it has signed 3 MoUs with the MP Government.
An MoU with MP Power Management Company Limited (MPPMCL) worth Rs. 15,086 crore was signed for the upcoming Sarani and Amarkantak thermal power projects. Apart from these projects, this MoU also covers works related to technology upgradation, system improvement and renovation at other power projects in Madhya Pradesh.
Second MoU signed by REC entails financial assistance of Rs. 1,000 crore to Rewa Ultra Mega Solar Ltd. (RUMSL) for the development of Renewable Energy (RE) parks along with the associated power evacuation infrastructure in MP.
In addition to these two MoUs, REC will be providing assistance of Rs. 5,000 crore to state DISCOMS in partnership with the World Bank. REC stated that this amount will be used towards strengthening power distribution reforms.
UP to Get REC’s Assistance for 13,000 MW Power Capacity Development, T&D Infra
REC signed 5 MoUs with the UP Government, as per which financial assistance will be extended for power capacity addition of about 13,000 MW along with Transmission and Distribution (T&D) infrastructure development in the state.
The first MoU signed with the UP Government entails the development of a power generation project for which Rs. 14,103 crore financial assistance will be provided by REC. This project will have a generation capacity of about 3,000 MW, and associated works like pollution control works will be covered under this MoU.
For Renewable Energy, REC will extend assistance of Rs. 45,350 crore for setting up about 10,000 MW generation capacity in the state.
Additionally, two MoUs, one covering assistance of Rs. 13,600 crore for distribution works and the other involving Rs. 7,800 crore assistance for transmission works, have been signed by REC. This assistance will be used in strengthening the T&D system in UP.
Other than these MoUs, REC will also provide funding of about Rs. 20,000 crore for developing project infrastructure across different sectors.
Significance of REC’s MoUs in terms of India’s Growing Power Demand
As per a report by the India Brand Equity Foundation (IBEF), the demand for power in India will hover around the 817 GW mark by 2030. Currently, India has an installed power capacity of about 408.72 GW. Therefore, power capacity addition as well as a reliable T&D system assume great importance.
REC’s MoUs with the MP and UP governments are non-binding in nature, but even if availed partially, REC’s financial assistance for power generation and T&D projects will prove consequential.
Two of these MoUs are for Renewable Energy capacity addition in the states, which falls in line with Central Electricity Authority’s (CEA) estimate of having 44% share of RE in India’s energy mix by 2029-30 from 18% as of 2022.
About REC Ltd.: REC Ltd. is a Maharatna Public Sector Undertaking (PSU) under the Ministry of Power, Government of India. As of March 2022, REC had a net worth of over Rs. 50,000 crore, and the company has a network of 22 offices across India.