The market seemed enamoured with power sector stocks on Thursday as the Union Cabinet approved a bill that will lead to far-reaching reforms in the crucial sector.

CESC (up 7.97% to Rs 21), Gujarat Industries Power (up 4.96% to Rs 22.20), BSES (up 1.28% to Rs 233.90), Tata Power (up 3.08% to Rs 123.90), Ahmedabad Electricity (up 1.01% to Rs 55), Bhel (up 1.14% to Rs 212.40), Siemens (up 1.87% to Rs 337.90) and Alstom Power (up 1.39% to Rs 65.65) were among the power sector stocks that made significant gains early today.

The sector proved exemplary in a flat market as the BSE Sensex stood at 3,298.98, down 3.06 points, at 10:10 IST.

On Wednesday, the Union Cabinet approved the much-awaited Electricity Bill setting off anticipation that its conversion into an Act is now imminent.

The Electricity Bill is expected to prompt conversion of state electricity boards into generating and distribution companies. This will extend temporary relief for power equipment and utility companies.

It 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 of the Parliament had earlier cleared the Electricity Bill with a few suggestions. 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 19 January and 19 February 2003, the power sector, comprising 32 Electric Equipment and Power Generation and Supply companies added Rs 1,227.63 crore (Rs 12.27 billion) or 9.3% to Rs 14,428.91 crore (Rs 144.28 billion) from Rs 13,201.28 crore (Rs 132.01 billion) in market capitalisation.