Shares of power companies are under focus on Wednesday following reports that the Centre extended Section 11 of the Electricity Act, 2003, until June 30, 2024. According to an earlier directive from the government, Section 11 directives were to expire on October 30 of this month.
The move has been taken by the government to help imported coal-based power plants continue running at full capacity. The Ministry of Power had invoked Section 11 of the Electricity Act in order to meet the expected rise in the demand for power.
Shares of Tata Power Company Ltd shed over 2% in trade on Wednesday and dropped 1.5 percent to trade at Rs 234.7 per piece on the BSE at 1:42 pm. Similarly, shares of Adani Power fell 2% intraday and were seen trading 0.7% lower at Rs 314.4 per piece.
In February this year, the government asked all imported coal-based (ICB) power plants to run at full capacity by invoking Section 11 of the Electricity Act, 2003, anticipating peak demand of 229 gigawatts (GW) in April. At that time, Section 11 was expiring on June 15.
Section 11 of the Electricity Act, 2003, states that under extraordinary circumstances, the government can ask power-generating companies to operate and maintain output in accordance with the directions given.
“Extraordinary circumstances” here essentially mean a threat to the security of the state, public order, natural calamity, or such other circumstances arising in the public interest.
In this particular situation, Section 11 “extraordinary circumstances” pertains to the times when the demand for power surpasses supply which gets affected due to a shortage of coal at thermal plants.
(Edited by : Ajay Vaishnav)
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