Power sector stocks surge

Power sector stocks were stimulated on Friday following the passage of the Electricity Bill 2001 in Parliament on Thursday.

Major power sector stocks like Tata Power (up 2.70% to Rs 120), CESC (up 1.59% to Rs 16), Gujarat Industries Power (up 2.64% to Rs 17.50) and BSES (up 1.66% to Rs 223.50) made headway in morning trades on BSE.

In contrast, the BSE Sensex was at 3,029.97, down by 5.36 points.

The rise in power generation and supply stocks follows news that the much awaited Electricity Bill has been passed in the Lok Sabha. The Bill pushes power sector reforms in three radical ways. It makes the continued existence of bundled SEBs conditional on occurrence of centre, mandates open access in distribution apart from allowing parallel distribution systems to be set up where required, and extends the scope of captive generation to cooperative groups and associates.

The Electricity Bill is expected to engender an improvement in the health of State Electricity Boards. The passage of Electricity Bill will also give a big boost to the power sector as it is a comprehensive legislation putting together all the legislative measures required to push the power sector onto a trajectory of sound commercial growth. It envisages a competitive scenario, where regulators, on the one hand, and private power utilities, on the other, play increasingly significant roles. The bill provides a comprehensive yet flexible legislative framework for power development.

Meanwhile, the Union Budget has also provided cheer for the power sector following the thrust on infrastructure (deemed as one of the five key focus areas for future development), improvement in power distribution and attention on capacity addition. The Government had , in 1999, notified 18 power projects as mega projects, conferring upon them various duty and licensing benefits. The Government now proposes to liberalise the mega power project policy further by extending all these benefits to any power project that fulfills the conditions already prescribed for mega power projects.

Given the importance of transmission in the power sector, customs duty on specific equipment for high voltage transmission projects has been reduced to 5% from 25% earlier. To further research in solar energy, wind turbines and hydrogen fuel as alternatives to fossil fuels, the Government is especially allocating Rs 20 crore to the Council for Scientific and Industrial Research, for launching incentive-driven research in these three fields.