Power sector stocks were at the forefronts of Wednesday's early market surge as they are anticipating far-reaching legislation in the form of the expected Electricity Bill.

Additionally, there's much expectation that the electrical equipment and power generation and supply sector will benefit from sops afforded by the forthcoming Union Budget (on 28 February 2003).

BSES (up 1.46% to Rs 233.50), Tata Power (up 1.13% to Rs 121.25), Gujarat Industries Power (up 2.43% to Rs 21.10), Bhel (up 1.50% to Rs 210.20), ABB (0.93% to Rs 325) and Alstom Power (up 2.43% to Rs 65.45) were among the power sector stocks that registered gains on Wednesday.

The much-awaited Electricity Bill is expected to set off the conversion of state electricity boards into generating and distribution companies. This will extend temporary relief for power equipment and utility companies.

The Electricity Bill seeks to abolish the current restrictions on power generators and aims at reforming the sector. Analysts say the bill will improve the health of state electricity boards. This, in turn, will help power equipment companies improve their financials as they receive substantial revenues from SEBs.

The Standing Committee has cleared the Electricity Bill with a few suggestions, which has been taken up with the Union Cabinet. The long-standing hurdles to improvement of the power sector will be removed once the Electricity Bill becomes an Act.

The passage of the Electricity Bill will be followed by a National Tariff Policy in order to bring about uniformity in the tariff fixation procedure by state regulatory commissions.

In December 2002, a parliamentary panel had cleared the Electricity Bill, that proposes to rationalise electricity tariff. The passage of the bill in Parliament, in fact, will give power companies access to transmission and distribution and they may even be made eligible to supply power directly to consumers.

Apart from the emphasis on private participation in the bill, competition and efficiency, introduction of anti-theft laws at the state level, open access to the transmission and distribution network and time-bound restructuring of the SEBs have also been given a serious thought.

Meanwhile, industry also has some expectations from the Union Budget 2003-04 for the sector - the exemption of customs and excise duties on capital equipment, removal of fiscal levies on fuels, lowering of the customs duty on LNG to zero from the present 5%, lowering of customs duty for captive power plant equipment and to be brought at par with that of power generation projects and provision of tax holiday for a block of 10 years, in the first 15 years of a power project.

Between 18 January and 18 February 2003, the power sector, comprising 35 Electric Equipment and Power Generation and Supply companies added Rs 1,090.4 crore (Rs 10.9 billion) or 8.18% to Rs 14,412.12 crore (Rs 144.12 billion) from Rs 13,321.72 crore (Rs 133.21 billion) in market capitalisation.