Power stocks rallied up to 13 per cent on BSE in otherwise weak trade on Thursday after Finance Minister Nirmala Sitharaman announced a much-awaited relief package for ailing power distributing companies. A part of Rs 20 lakh crore Atma Nirbhar Bharat Abhiyan package will provide a fresh loan of Rs 90,000 crore through PFC-REC to state-run power distribution companies (discoms) which will reduce receivables of electricity generation companies. In today’s trade REC share price fell 2.33 per cent to Rs 98.15, while Power Finance Corporation (PFC) shares dropped 2.17 per cent to Rs 87,65 apiece. However, other power stocks Adani Power share price rallied up to 13 per cent to Rs 36 apiece on BSE, Tata Power shares jumped 9.5 per cent to Rs 33.20 apiece, Reliance Infrastructure shares gained 5 per cent to Rs 18.15.
Similarly, shares of Jaiprakash Power Ventures, Reliance Power, K.P. Energy were up in the range of 3-5 per cent. While JSW Energy, Torrent Power, CESC, Green Power gained up to 3 per cent in the morning trade. However, Power Finance Corporation and PEC shares slipped over 2 per cent each to Rs 87.65 and Rs 98.15, respectively. In comparison, BSE Sensex was down 509 points or 1.59 per cent at 31,499.22. “Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) will infuse liquidity in the discoms to the extent of Rs 90,000 crore in two equal instalments. This amount will be used by discoms to pay their dues to transmission and generation firms,” FM Sitharaman said.
The government has also announced to give loans against state guarantees for the exclusive purpose of discharging liabilities of discoms to gencos. Also, discoms will provide the facility of digital payments to consumers. “For the DISCOMS, the amount may be small but useful for them as they can use the funds to pay the generators and transmission companies. The Rs 90,000 cr will be paid from reserves or alternatively borrowed from the market,” CARE Ratings said.
The loans will be secured against receivables and guaranteed by respective state governments. “However, since it comes with additional riders and conditions on digitization, reducing AT&C losses, etc., it is to be seen how much of this will be actually disbursed,” Emkay Global Financial Services said in its recent report. “Given the adequate capitalization levels of PFC/REC, the fiscal impact should be negligible,” it added.
“We welcome the reforms announced by the government around discoms as it ensures a steady flow of income. However, it just puts the burden on REC and PFC,” Amar Ambani, Senior President and Head of Research, YES Securities, said.