Shares of power companies were in focus in Monday's trade after the Central government went ahead and extended Section 11 of the Electricity Act, 2003, till September 30 this year. The government said that plants using imported coal will operate at full capacity till September. The move is largely along the expected lines.
This is positive for stocks such as Tata Power and Adani Power as they have facilities in Mundra, which at this point, do not have long term power purchase agreements (PPAs). These power companies will be able to make complete recovery of the cost that they are incurring.
Shares of Tata Power Company Ltd were almost flat in trade Monday. At 2:57 pm, the scrip was trading 0.068 percent higher at Rs 221.35 level. Meanwhile, Adani Power shares were trading 1.63 percent lower at Rs 271.70 apiece.
"On overall power sector, we have been positive for quite some time and we believe that the recent developments in this particular sector, especially the focus on the new energy, which is wind, and solar, has done wonders for the companies in this space," said Sudip Bandopadhyay, Group chairman at Inditrade Capital.
According to an earlier directive, Section 11 was expiring on June 15. In February this year, the government had 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.
The ministry said the country's power demand hit an all-time high of about 215 GW in 2022, driven by the spike in demand from households amid a heatwave in March, April and May, and a pick-up in industrial demand.
What is Section 11 of the Electricity Act?
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 directions given.
The section states that an appropriate commission may consider offsetting the adverse financial impact of the directions on any generating company in such manner as it considers appropriate.
What are the extraordinary circumstances?
For the purposes of this section, the expression “extraordinary circumstances” means circumstances related to threat to security of the state, public order or natural calamity or such other circumstances arising in the public interest.
Explaining “extraordinary circumstances” in the context of the past one year, spokespersons of the power ministry said it refers to the times when electricity demand far surpasses supply, which gets affected due to a shortage of coal at thermal power plants.
Here's a list of imported coal-based power plants in India —
Coastal Gujarat Power Ltd
Adani Power Mundra Ltd. (TPS-1 & I|)
Adani Power Mundra Ltd (TPS-|II)
Essar Power Gujarat Ltd.
JSW Ratnagiri Ltd.
Tata Trombay Ltd.
GSECL Sikka Ltd.
IL&FS Tamilnadu Power Company Ltd
Muthiara-Coastal Energen
Udupi Power
Simapuri Energy Ltd
Meenakshi Energy Ltd
JSW Torangallu-1 & 2
SEPC Power Private Ltd
OPG Generation(P) Ltd
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