Power sector stocks were in the limelight on Thursday as sops from the forthcoming Union Budget and the reform-seeking imminent Electricity Bill could hold these stocks in good stead.
Stocks such as CESC (up 4.80% to Rs 20.75), Gujarat Industries Power (up 3.94% to Rs 21.10), Tata Power (up 2.13% to Rs 122.15), BSES (up 0.15% to Rs 234.25), Siemens (up 1.21% to Rs 326.50) and Alstom Power (up 3.30% to Rs 64.10) made much headway.
However, Bhel (down 2.54% to Rs 213), ABB (down 1.66% to Rs 320) and Surat Electricity (down 1.85% to Rs 77) were trading lower on profit booking after some huge gains in last few sessions.
Over the last one month, 32 companies of the power generation and supply sector and the electrical equipment sector added 10.7% in market capitalisation to Rs 14,766 crore (Rs 147.66 billion) from Rs 13,340 crore (Rs 133.4 billion).
Analysts say the rise in power scrips is purely driven by speculation ahead of the Union Budget. It is expected that the power sector will be one of the biggest beneficiaries of the forthcoming budget.
Earlier, the Union Cabinet approved the much-awaited Electricity Bill setting off anticipation that its conversion into an Act is now imminent. The Electricity Bill is expected to prompt conversion of state electricity boards into generating and distribution companies. This will extend temporary relief for power equipment and utility companies.
It seeks to abolish the current restrictions on power generators and aims at reforming the sector. Analysts say the bill will improve the health of state electricity boards. This, in turn, will help power equipment companies improve their financials as they receive substantial revenues from SEBs.
Meanwhile, analysts say, if at all the bill is passed, implementation of the bill is important for the financial improvement of power companies. However, sentiment will definitely improve towards the sector as a result of the bill.
The Standing Committee of the Parliament had earlier cleared the Electricity Bill with a few suggestions. Long-standing hurdles to improvement of the power sector will be removed once the Electricity Bill becomes an Act.
The passage of the Electricity Bill will be followed by a National Tariff Policy in order to bring about uniformity in the tariff fixation procedure by state regulatory commissions.
In December 2002, a parliamentary panel had cleared the Electricity Bill, that proposes to rationalise electricity tariff. The passage of the bill in Parliament, in fact, will give power companies access to transmission and distribution and they may even be made eligible to supply power directly to consumers.
Apart from the emphasis on private participation in the bill, competition and efficiency, introduction of anti-theft laws at the state level, open access to the transmission and distribution network and time-bound restructuring of the SEBs have also been given a serious thought.
Meanwhile, power industry also has some expectations from the Union Budget 2003-04 for the sector - the exemption of customs and excise duties on capital equipment, removal of fiscal levies on fuels, lowering of the customs duty on LNG to zero from the present 5%, lowering of customs duty for captive power plant equipment and to be brought at par with that of power generation projects and provision of tax holiday for a block of 10 years, in the first 15 years of a power project.
