Tata Power, Power Grid and NTPC shares rise as Street cheers power distribution reform

Shares of Power Grid and JSW Energy advanced more than a percent whereas Tata Power jumped close to 2 percent. Reliance Power rose half a percent while Adani Power was in the red down 0.10 percent from its previous close to Rs 313.55 on BSE at 11:48 am.

Power stocks are on an upward trajectory as the revamped power distribution scheme offers to improve operational efficiencies, ensure financial sustainability of discoms and power departments, provide financial assistance to discoms, modernise and strengthen distribution infrastructure and improve reliability and quality of supply to the end consumers.

The reform also aims to reduce Aggregate Technical and Commercial (AT&C) losses to pan-India levels of 12-15 percent and bring down Average Cost of Supply - Average Revenue Realized (ACS-ARR) gap to zero by 2024-25.

At the launch, PM Modi explained that India’s distribution sector is experiencing double-digit losses whereas it is in the single digit in wealthy nations. This points to the wastage of a lot of electricity, which forces the nation to produce more electricity than is required to meet demand, he said.

He also highlighted that in many states there is a dearth of investment in lowering distribution and transmission losses.

Several states owe more than Rs 1 lakh crore in back taxes while many government agencies and local entities owe power distribution firms more than Rs 60,000 crore, he said. Modi urged the states whose dues are pending, to clear them as soon as possible.