Gujarat Clears Tata Power Deal for Supply Resumption

• Gujarat clears Tata Power Mundra supply restart deal.
• 4-GW plant to resume after 6-month shutdown.
• Move boosts power supply amid gas shortage fears.

The Gujarat state government in India has given its nod to the revised power supply agreement with Tata Power, thus facilitating the restart of long-term electricity supply from its 4-GW coal-fired power plant in Mundra.

The Mundra plant had been closed for almost six months following the withdrawal of an emergency government provision which allowed power producers to be compensated for using costly imported coal. The fresh agreement will permit the plant to restart its operations and produce electricity under changed commercial conditions.

It is a very timely move from the point of view of India as the country is planning to increase the share of coal-based power generation due to the shortage of natural gas caused by the ongoing West Asia conflict and the increased electricity demand during the summer.

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The deal is still awaiting a green light from the federal power regulator, and it will be effective from April 2025, in a retroactive manner. Even though the precise tariff figures have not been revealed, Gujarat has insisted that the power rates should be comparable to those charged to other states.

The action is considered to be a major breath of fresh air for India's energy sector since reviving the Mundra facility will contribute to the stabilization of the electricity supply during the times of high demand. Besides, it is also indicative of a wider policy change that aims at making the best use of the existing thermal power plants to offset the effects of global energy crises.