Tata Power’s Mundra Plant to bring relief to worst-hit states

Tata Power’s Mundra Plant to bring relief to worst-hit states

Power crisis in five most-affected states is likely to ease soon as restarted its mega power plant at Mundra on Wednesday after Punjab and Gujarat agreed to pay actual costs. Some other states are likely to follow.

The Gujarat government agreed to buy 1,800 MW power from Tata Power’s ultra-mega power project at ₹4.50 per unit-higher than tariff agreed in its executed contract-for four weeks, a government official said.

ET was the first to report on October 12 that Punjab has agreed to take 500 MW electricity at ₹5.5 per unit from Tata Power’s Mundra plant for one week.

Sources said Rajasthan, Maharashtra and Haryana, beneficiaries of Tata Power’s 4,000 MW project and ‘s 3,300 MW capacity, have also been negotiating with the companies over supply at actual cost on temporary basis. The states have been buying the power at ₹13-16 per unit.


A Tata Power executive told ET in response to a query that it started one of its five 800 MW units at Mundra on Wednesday evening to supply power to Gujarat and Punjab.

“Of the first unit, 600 MW has been allocated to Gujarat and 160 MW to Punjab based on consent issued by them. The second unit will come up by Thursday night and the third by Saturday morning. The allocation will be done based on the consent letters of the procurer states,” he said.

The move is likely to lower spot power prices immediately while easing pressure on domestic coal, whose supplies have also started to improve.

The Mundra projects have been shut for over one month as imported coal prices peaked $160 per tonne and existing contracts do not allow the costs to be passed on in the tariff. Sources said the projects have imported coal stock sufficient to run for over a month.

Ironically, the beneficiary states had fought a decade-long battle opposing compensatory tariff to the project. Beneficiary states except Gujarat did not revise the tariff even after the Supreme Court allowed compensatory tariff for Tata Power.

Desperate bids by power discoms in the wake of low domestic coal availability at power plants have pushed peak prices on the Indian Energy Exchange to Rs 20 per unit. The average price discovered on IEX for delivery on Thursday was Rs 13.13 per unit, while the maximum price was Rs 17.9 per unit.

The special dispensation to buy the power at actual variable costs comes amid a severe nationwide power crisis as imported coal-fed plants supplying to the states stopped generation due to higher fuel costs and domestic coal stocks depleted at power plants as heavy rainfall impacted supplies.

On October 12, 142 GW power projects of 165 GW were operating with stocks of seven days while the average coal stock was at four days.

Coal minister Pralhad Joshi on Wednesday tweeted that cumulative coal supplies to thermal power plants from all sources, including Coal India, recorded more than two million tonnes on Tuesday. “We are increasing coal dispatch to power plants further to ensure sufficient coal stocks at power plants,” he said.

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