Shares of seven companies operating in the power sector fell by 0.3% to 5.52% at 15:16 IST on BSE in volatile trade after the Supreme Court today, 24 September 2014 cancelled 214 of 218 coal blocks allocated by successive governments since 1993.
Among shares of companies operation in power sector, Jaiprakash Power Ventures (down 5.52%), Adani Power (down 1.47%), Reliance Infrastructure (down 0.3%), NHPC (down 1%) and Power Grid Corporation of India (down 0.55%) edged lower.
Tata Power Company (up 0.29%), NTPC (up 1.24%), JSW Energy (up 4.05%) and Reliance Power (up 5.48%) gained.
Among power finance companies, REC (down 0.98%) and Power Finance Corporation (down 1.14%) declined.
The S&P BSE Power index was down 0.31% at 2,034.20. It underperformed the BSE Sensex, which was down 0.11% at 26,746.96
The S&P BSE Power index had underperformed the market over the past one month till 23 September 2014, falling 3.11% compared with 1.35% rise in the Sensex. The index had also underperformed the market in past one quarter, declining 7.39% as against Sensex's 6.97% rise.
The Supreme Court today, 24 September 2014 cancelled 214 of 218 coal blocks, which were allocated to companies illegally. The four coal blocks which are exempt from the verdict are run by the Central government with no joint venture with the private sector, reports indicated. The order will be operational after six months, the apex court said, adding that the government could hold auctions for these blocks post 31 March 2015.
A bench headed by Chief Justice R M Lodha last month had held that all coal blocks allocations since 1993 by various regimes at the Centre have been made illegally and arbitrarily. However, it had stopped short of cancelling them saying, what the consequences will be is the issue which remains to be tackled.
Cancellation of coal blocks could potentially plunge the power sector into a crisis as the disputed coal blocks reportedly account for a tenth of the annual coal output in the country. Moreover, because of limited domestic coal supplies, companies have had to resort to imports.
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