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Power Stocks Soar as Government Orders Coal Plants to Run at Full Capacity

The Power Ministry ordered imported coal-fired power plants to run at full capacity for three months starting March 16.

In Tuesday’s trading, power companies and related stocks were in demand after the Ministry of Power ordered imported coal-fired plants to run at full capacity in the run-up to summer.

The BSE Power index rose more than 1% intraday, led by Adani Power, which locked in the upper 5% range for the fourth day.

NTPC rose nearly 3% to lead the Sensex index. Tata Power, JSW Energy, CG Power, Godawri Power and Ispat, NHPC and Power Grid are trading 1-4% higher.

Power component maker Siemens also gained more than 3%, while power trading exchange IEX (India Energy Exchange) rose 5%.

The government has invoked emergency powers under Section 11 of the Electricity Act to enforce the regulation as it anticipates a record surge in electricity demand this summer.

“To ensure that the supply of electricity meets the expected demand, there is a need to increase the generation of the ICB power plant. Therefore, in the greater public interest, to ensure the optimum power generation from the ICB power plant, directions have been issued under Section 11 of the Electricity Act 2003, requiring all ICB power plants to operate and generate electricity at full capacity,” the Power Ministry reported.

The order will enact on March 16 and will be in effect until June 15. The ministry had reportedly forecast a peak demand of 229 GW in April, and to address this, it said India would need to operate 193 GW of thermal capacity for the month.

Many of India’s power plants using imported coal, including those owned by Adani Power and Tata Power, have not been operating at full capacity recently as they find it difficult to compete with cheap domestic coal generation, Reuters reported.

Among other related stocks, consumer electronics companies such as Symphony (7%), Voltas (1.7%) and Whirlpool (0.9%) also traded firmer on hopes that demand for electronic devices will be strong amid the heat.

Delhi recorded its highest temperature of the season at 33.6°C on Monday. It’s also the highest in the past 10 years, according to some meteorologists, which could herald an early summer this year.

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