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Power Stocks Rally on Govt Coal Reforms


Power sector stocks rallied after the on the govt's move towards energy sector reforms. The Cabinet recommended promulgation of an Ordinance to facilitate e-auction of coal blocks for private companies for captive use and allot mines directly to state and central PSUs, reported PTI.

Power Finance was up a huge 4 per cent in trade, while NTPC gained two per cent, Reliance Power and JSW Energy were all up 2 per cent in trade.


The move comes against the backdrop of the Supreme Court last month quashing allocation of 214 coal blocks to various companies since 1993.

Power Stocks Rally on Govt Coal Reforms
Power Finance Corporation: Quotes, News
BSE 119.20BSE Quote1.85 (-1.55%)
NSE 119.25NSE Quote1.75 (-1.47%)
NTPC: Quotes, News
BSE 129.85BSE Quote2.8 (2.16%)
NSE 129.90NSE Quote2.85 (2.19%)
"The Cabinet has recommended promulgation of an Ordinance to the President in order to resolve the pending issues particularly the situation arising out of the Supreme Court judgement quashing the allocation of the coal blocks," Finance Minister Arun Jaitley said briefing the media after the meeting.

State sector requirements including those of the Central and state governments would be met and coal mines would be allocated to PSUs like NTPC or state electricity boards.

"As far as the private sector is concerned, the actual users of coal in the cement, steel and power sectors who apply for a certain number of coal mines will be put in the pool and there would be an e-auction. A sufficient and adequate number of mines would be put so that actual users go back with the mines," he said.

Jaitley said the auction process would be "transparent" and completed in "three to four months" with proceeds going entirely to the state governments where the mines are located.

"The entire mess that the UPA had left behind from 2005 onwards over the next four months would be cleaned up," he said, adding coal worth USD 20 billion which was being imported annually would be domestically substituted through this measure.

The biggest beneficiaries would be the eastern states like Jharkhand, Odisha, West Bengal and Chhattisgarh. States like Madhya Pradesh, Maharashtra and Andhra Pradesh would also benefit.

"This will financially empower particularly the eastern states (which have most of the coal mines) and lakhs of labourers would get employment while bank capital held up with the allottee companies would be fruitfully utilised," the Finance Minister said.


Jaitley vehemently denied a suggestion whether the process could be termed as "de-nationalisation" of the coal sector saying, "The original Nationalisation Act remains and will remain and Coal India Ltd will be fully protected.

Story first published: Tuesday, October 21, 2014, 11:14 [IST]
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