Tata Power to restart 4 GW Mundra plant after Gujarat PPA approval

Tata Power’s long-idled Mundra thermal power plant is set to resume operations after the Gujarat cabinet approved a Supplementary Power Purchase Agreement for the facility. The company confirmed to stock exchanges on March 20 that the government order has been issued and that the formal agreement with Gujarat Urja Vikas Nigam Limited will be signed once the remaining regulatory clearances are in place.

The Mundra plant, one of India’s largest imported coal-based power facilities with a capacity of around 4 GW, had been shut for roughly nine months, during which it was accumulating significant cash losses. The key financial sticking point had been coal cost recovery; the revised agreement is structured as a pass-through arrangement, meaning fuel costs will no longer be absorbed by Tata Power, removing the primary reason the plant had become unviable to operate.

The restart is expected to eliminate cash losses that had been running at several hundred crore rupees per year and contribute positively to Tata Power’s EBITDA. The company has indicated that power generation could resume shortly, ahead of peak summer demand.

Beyond Gujarat, Tata Power has indicated discussions are ongoing with other procurer states for similar agreements, which could unlock the plant’s full 4 GW capacity for the grid.