Budget 2020: Thrust on power & natural gas

Union Budget 2020-2021 has given a major boost to the power and natural gas sector. A new scheme of smart metres will be launched. The prepaid metres will give freedom to the consumers to choose suppliers and rate as per their requirement. A total fund allocation of Rs 22,000 crore will be given to the power and renewable sector. Given the ambitious plan of the government to double the renewable energy capacity to 175 GW by 2022 from 86 GW at present, the market was expecting some additional perks in the power sector, considering the increasing electricity demand.

Shares from the power sector included Power Grid Corporation down by 6.1 per cent, Adani power down by 4.5 per cent, Tata Power down by 8.3 per cent, Torrent power down by 4.7 per cent, NHPC down by 5.5 per cent and Adani Transmission up by 2.9 per cent.

In this budget, under the oil & gas sector, National Gas Grid is proposed to be expanded from 16,200 km to 27,000 km. The reforms which would be introduced will deepen gas markets and enable ease of transactions and transparent price recovery. Currently, around 7,000 km of pipeline is under construction. A major expectation by the oil & gas sector was to see the natural gas to be curbed under the ambit of GST. This would have given benefit of the input tax credit that can be availed by the users and the companies would have got a boost in savings.

Shares from the natural gas sector include Indrapratha Gas down by 2.3 per cent, Mahanagar Gas down by 6.1 per cent and Gujarat Gas is down by 1.3 per cent.

When the sector specific announcements were made, the above mentioned stocks had reacted positively however, with the dip in benchmark indices, these stocks also faced correction.