Stocks of capital goods and power sector biggies, such as Larsen & Toubro (L&T) and Bharat Heavy Electricals (Bhel), outperformed the Sensex in the last five trading sessions on the news that the government was all set to clear a mega power generation equipment manufacturing project worth over Rs 40,000 crore.
The project, which will use supercritical components, is being cleared as part of the government’s 11th Five-Year Plan.
While share prices of Bhel and L&T rose between 8.63 per cent and 10 per cent respectively compared to Sensex’s rise of 5.78 per cent in the last five trading sessions, stocks of some other companies, such as Alstom Projects India, PowerGrid Corporation of India, Siemens and ABB, that have acquired the manufacturing technology and execution skills using supercritical components gained between 5 per cent and 23 per cent.
| FLYING HIGH | |
| Company | Rise in a week (%) |
| Alstom Projects | 24.00 |
| Siemens | 14.37 |
| L&T | 10.00 |
| Power Grid | 9.00 |
| Bhel | 8.63 |
The stocks started rising during this period as top companies stepped up lobbying for the project. Also, the issue of qualification criteria for the project gathered steam last week after a top engineering firm lobbied with the Centre to make it mandatory for bidders to be incorporated in India with, at least, 51 per cent equity being held by a domestic firm. The Central Electricity Authority (CEA), the country’s apex power sector planning body, however, had opposed the equity clause because it would limit competition.
Government sources informed that some big engineering companies from China have expressed disappointment and resentment over the 51 per cent equity holding criteria as it would straightaway disqualify them from this global tender.
According to top power ministry sources, Prime Minister Manmohan Singh would take a final decision on the qualification criteria. Component supply orders would be awarded through an international bidding with the condition that the winner would have to set up manufacturing facilities in India.
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It is understood that the government plans to order 11 units of 660 MW each before the end of March.
The Centre had launched the supercritical power programme on the lines of the US, Japan, Germany, Korea and Russia, which would result in saving about 4 per cent fuel. It is basically a clear energy producing method and the government has been striving to meet the capacity addition target of 78,700 MW in the 11th Plan. The power generated through this project would form 18 per cent of the total power production in the country. The government plans to generate 50 per cent of the total power generation by using this technology in the 12th Plan.
“After lot of delays, we expect a major push by the government on supercritical technology power equipment in the country. The technology has a huge potential of saving fuel cost and lower carbon dioxide emission,” said Rupal Kyamsaria, analyst at Networth Stock Broking.