Power stocks surge as govt orders coal-based plants to run at full capacity

Shares of power companies and related stocks were in demand in Tuesday’s trade following the power ministry’s mandate that imported coal based plants will be run at full capacity in the run up to the summer season. 

The BSE Power index rose over 1 per cent intra-day with the gains being led by Adani Power, which was locked in the 5 per cent upper circuit for the fourth day.  

NTPC jumped nearly 3 per cent and was the lead Sensex winner. Tata Power, JSW Energy, CG Power, Godawri Power and Ispat , NHPC and Power Grid were trading 1-4 per cent higher at the time of this report. 

Power component maker Siemens also rallied over 3 per cent while power trading exchange IEX (Indian Energy Exchange) was up 5 per cent. 

The government has invoked emergency powers under Section 11 of the Electricity Act to impose the rule as it expects record surge in power demand this summer. 

“To ensure availability of electricity to meet the anticipated demand, the generation from ICB plants needs to be increased. Accordingly, in larger public interest, for ensuring optimum generation from ICB plants, directions are issued under Section-11 of the Electricity Act, 2003 that all ICB power plants shall operate and generate power to their full capacityl,” an order reportedly said by the power ministry.

The directive comes into effect on March 16 and would remain valid till June 15. As per reports, the ministry expects a peak demand of 229 gigawatts in April and to address that India would need to operate thermal capacity of 193 gigawatts that month, it said.

As per Reuters, many of India's power plants that use imported coal, including those owned by Adani Power and Tata Power have not operated at full capacity recently because they have found it difficult to compete with power generated from cheap domestic coal. READ

Among other related stocks, consumer electronic players such as Symphony (7 per cent), Voltas (1.7 per cent) and Whirlpool (0.9 per cent) were also firm in trade on hopes of strong demand for electronic appliances amid high temperatures.  

Delhi recorded the season’s highest temperature of 33.6 degree Celsius on Monday, which as per some meteorologists is also among the highest in the last 10 years that could signal the early onset of summers this year. READ