Power stocks gain over 2% on cabinet approval

MUMBAI: Shares of power generation companies today edged higher by around 2 per cent after government allowed power producers to pass on higher cost of imported coal to consumers.

NTPC jumped 2.11 per cent, Power Grid Corporation climbed 1.18 per cent and Tata Power rose by 0.74 per cent.

"Among the spotlight was the power stocks which saw buying interest after the CCEA gave approval to the power companies to pass on the cost of imported coal to customers. NTPC, Tata Power, Powergrid were all in green," said Rakesh Goyal-Senior Vice President,Bonanza Portfolio Limited.

Electricity tariff across the country will increase by a minimum 15 to 17 paise per unit after the government today allowed power producers to pass on higher cost of imported coal to consumers.

Finance Minister P Chidambaram said the Cabinet Committee on Economic Affairs has approved the pass through proposal, which would result increase in power tariff.

"There will be small increase in power tariff. It will be very marginal increase on unit cost of power depending upon the cost of import of coal," Chidambaram said in New Delhi.

The pass through mechanism will be applicable for nearly 78,000 MW of thermal stations commissioned after 2009, of which 38,000 MW is new capacity.