Power shares rally on tariff hike buzz

Shares of power generation companies have surged more than 4% each on report that the government will allow to raise tariffs by up to Re 1 per unit for power projects using imported coal to offset the effect of increase in fuel price due to additional taxes or changes in law by the governments of source countries.

The changes made in tax laws by source countries such as Australia and Indonesia, have raised fuel costs for all imported coal-fired power projects, even those that were based on supplies from captive mines in these countries.

“The power ministry is set to refer the issue of cost escalations and price passes through to the Central Electricity Regulatory Commission (CERC),” the report suggests.

The Bombay Stock Exchange (BSE) power index, the largest gainer among the sectoral indices is trading higher by 2% compared to less than 1% rise in the benchmark index Sensex.

Among the individual stocks, Adani Power, Reliance Infrastructure, JSW Energy and Tata Power have rallied more than 4% each on the BSE.