Tata Power and Adani power up

Tata Power is currently the top gainer, the stock price breached the 25% UC at Rs.86.15, with volumes surging over 4.5 times.

Adani Power also figures among the top five gainers on the BSE; going up over 14% at Rs.40.50. Volumes are up over 1.5 times.

Both the stocks suddenly spiked up after the Supreme Court directed the Central Electricity Regulatory Commission (CERC) to amend the power purchase agreements w.r.t three imported coal-based power plants – Adani Power, Tata Power and Essar Power.

The Gujarat Govt had submitted a proposal to bail out the loss-making power plants of Adani, Tata and Essar in Mundra.  It intended to pass on the increased fuel costs to power distribution companies. This was based on the recommendations of a high-level committee that was set up to suggest ways to revive the ailing power projects. This has faced stiff opposition, saying that it violated previously signed power purchase agreements (PPAs) signed so far. The SC had ruled out a tariff hike in 2017 after which these companies have been bleeding.

The companies had sought a revision since the projects depend on coal imported from Indonesia. Recent changes in the Indonesian regulation have rendered coal imports costlier.

And today’s ruling of the SC, asking CERC to make a quick decision on the power tariff is seen as an indication of the rate hike finally coming in for the companies. It will make power costlier for us but for the companies, this could be welcome news.