Shares of power generation firms rally despite weak market

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Shares of power generation firms rallied on Wednesday following the Presidential directive to Coal India Ltd (CIL) to commit fuel to power companies.

Shares of power firms surged 3.41 per cent to 0.57 per cent, despite a weak market.

The directive that was announced after the market hours on Tuesday, asking CIL to sign fuel supply agreements (FSAs) with power producers and assuring them of at least 80 per cent of the total committed coal delivery.

The BSE power index outperformed the Sensex which was down 0.53 per cent. The index was up nearly one per cent in morning trade, with gains of 0.29 per cent at 2,155.38 points at 1114 hours.

Adani Power was up 3.41 per cent, followed by JSW Energy (1.92 pc), Tata Power (1.78 pc), Reliance Power (0.91 pc), Torrent Power (0.61 pc), GVK Power & Infrastructure (0.57 pc).

The directive has been given to the PSU as it did not meet the deadline of March 31, set by the Prime Minister's Office, for CIL to enter into agreements with power producers which are facing fuel crunch.

While power producers welcomed the decision, analysts said CIL may stand to lose heavily in case it falters on its commitment to supply fuel to the energy firms.

Association of Power Producers (APP) welcomed the government move.

"It is a very positive step... now at least we are sure that 80 per cent of coal would be given to the power producers, all plants would now be able to run at 70 per cent PLF (plant load factor), thus would help generation," APP director general Ashok Khurana said on Tuesday.