Punjab to source power from Tata’s imported Coal-fed Mundra plant

Punjab to source power from Tata’s imported Coal-fed Mundra plant

Punjab has agreed to take electricity from ‘s imported coal-based power plant at Mundra in Gujarat for one week on an actual fuel cost basis. Gujarat and Maharashtra, the other beneficiary states of the project, are also expected to follow suit as electricity from the plant is expected to cost ₹5.5 per unit against an average price of ₹16 per unit on the power exchange.

In 2007, Tata Power won the bid for the Mundra Ultra Mega Power Plant (UMPP) at a price of ₹2.26 per unit.

Sources said a final confirmation from Tata Power is awaited. The company did not respond to ET’s queries till press time Monday.

The state government’s move could reduce pressure on domestic coal and help bring down prices on power exchanges, as urgent buying by stretched states had pushed up spot electricity prices.

Sources said Punjab’s own power generation cost is around ₹4 per unit.

Most of the state’s coal-fired power plants are operating at half capacity due to domestic coal shortage, resulting in power outages and restrictions on consumers.

Rajasthan and Haryana are among the five consumers of the Mundra project that stopped operations as imported coal prices touched $150 per tonne. The higher generation cost cannot be passed on in the tariff as per the existing contract.

The sources said the project has imported coal-stock sufficient to run for one month.

The beneficiary states had fought a decade-long battle opposing compensatory tariffs to the project.

Beneficiary states, except Gujarat, did not revise the tariff even after the Supreme Court allowed a compensatory tariff for Tata Power.

Senior state officials said Punjab State Power Corp Ltd (PSPCL) on Monday gave its consent for a ‘one-time dispensation’ to Tata Mundra UMPP to pay the actual variable cost to the project for a period of one week starting Tuesday.

Sources said the variable cost of the project is expected to be at around ₹4.6 per unit and fixed cost at ₹0.90 per unit.

“Due to the ongoing power crisis the state is faced with, we have decided to pay the project actual cost which comes to around ₹5.50 per unit against the power exchange price of ₹16 per unit average. Punjab is buying around 1,100 Mw daily from the exchange and during most times in the evening, the price on power exchange is ₹20 per unit,” an official said.

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