Power stocks surge on loan restructuring nod

The Cabinet Committee on Economic Affairs (CCEA) approved debt restructuring package

Shares of power companies such as Adani Power, JSW Energy, Lanco Infra, BHEL, Torrent Power, Reliance Power, Tata Power, NHPC and NTPC are trading higher by 1.6-4.5% each in the morning deals after the central government announced a debt restructuring package for distribution companies. The package comes a decade after the Union government extended a similar one-time settlement of state electricity boards’ dues.

The Cabinet Committee on Economic Affairs (CCEA) approved the package, which would restructure the debt of distribution companies by asking state governments to take over half of their short-term debt, with the remaining to be rescheduled by lenders.

The package makes it mandatory for state governments to go for annual revisions of power tariffs, convert loans to equity and bring in private participation in distribution. State-government controlled power distribution companies had accumulated debt of Rs 1.9 lakh crore, as of March 31, 2011.

The BSE power index on the Bombay Stock Exchange (BSE) has advanced 0.5% or 9 points to 2,033 levels. In the opening deals the index was the top sectoral gainer and was up 1.6%.