Stocks of power generation and transmission companies spurted on Monday on renewed buying support following reports that the Rajya Sabha has approved the Electricity Bill.

Stocks like Alstom Power (up 11.07% to Rs 62.20), CESC (up 4.23% to Rs 19.70), Gujarat Industries Power (up 4.40% to Rs 20.15), Siemens (up 3.72% to Rs 310.60), Bhel (up 3% to Rs 238.95), ABB (up 3.08% to Rs 318), Tata Power (up 2.46% to Rs 122.70), BSES (up 2.12% to Rs 224.25), Surat Electricity (up 2.99% to Rs 69) and Ahmedabad Electricity (up 5.71% to Rs 50) ruled firm in afternoon trades on the BSE.

Meanwhile, the BSE Sensex was at 2,985.55, up by 18.92 points.

The rally in power sector stocks was due to reports that the much awaited Electricity Bill has been passed in the Rajya Sabha. The Lok Sabha (lower house of Parliament has already passed the Bill in April 2003).

The Bill pushes for power sector reforms in three radical ways. It makes the continued existence of bundled state electricity boards conditional on concurrence of the Centre, mandates open access in distribution apart from allowing parallel distribution systems to be set up where required, and extends the scope of captive generation to cooperative groups and associates.

The Bill is expected to lead to an improvement in the health of SEBs. It envisages a competitive scenario, where regulators, on the one hand, and private power utilities, on the other, play increasingly significant roles. The Bill provides a comprehensive, yet flexible legislative framework for power development.

Meanwhile, the Union Budget for 2003-04 is also favourable for the power sector - in the form of the thrust on infrastructure (deemed as one of the five key focus areas for future development), improvement in power distribution and stress on capacity addition. The Centre had , in 1999, notified 18 power projects as mega projects, conferring upon them various duty and licensing benefits. It now proposes to liberalise the mega power project policy further by extending all these benefits to any power project that fulfills the conditions already prescribed for mega power projects.

Given the importance of transmission in the power sector, customs duty on specific equipment for high voltage transmission projects has been reduced to 5% from 25% earlier. To further research in solar energy, wind turbines and hydrogen fuel as alternatives to fossil fuels, the Centre has allocated Rs 20 crore to the Council for Scientific and Industrial Research for launching incentive-driven research in these three fields.