The Rural Electrification Corporation (REC) will partly fund -- to the tune of Rs.56.12 billion -- two power projects in Tamil Nadu with a total capacity to generate 1,600 MW.

A memorandum of understanding (MOU) to this effect was signed here Friday between Tamil Nadu Electricty Board (TNEB) and REC at the state Secretariat in the presence of chief minister M. Karunanidhi.

The agreement envisages REC lending Rs.34.37 billion to NLC Tamil Nadu Power Limited -an 89:11 joint venture between Neyveli Lignite Corporation Limited (NLC) and TNEB - that is promoting a 1,000 MW thermal project at Tuticorin.

REC will also lend Rs.21.75 billion to TNEB for adding another 600 MW capacity at its North Madras Thermal Power Station.

The two projects would involve a total outlay of Rs.76.27 billion -- with NLC Tamil Nadu Power at Rs.49.09 billion, and North Madras Thermal at Rs.27.18 billion.

Meanwhile, the state government has decided to unbundled TNEB into two outfits, one to look after the transmission aspect and the other to manage generation and distribution. A committee will go into the issue of restructuring TNEB.

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