Gujarat has approved a revised long-term power supply agreement with Tata Power, paving the way for the resumption of operations at the company’s 4-gigawatt Mundra plant. The decision is seen as a strategic step toward strengthening India’s energy security ahead of the high-demand summer season.
The Mundra plant, which relies on imported coal, had remained non-operational for the past six months. This followed the withdrawal of a government provision that earlier compensated power producers for the higher costs of imported coal. Without that support, operations became financially unviable, leading to a temporary shutdown.
The newly approved agreement offers a fresh lifeline to the plant and aligns with India’s broader push to maximize electricity generation from coal-based sources. The move comes at a time when concerns over a potential gas shortage are rising due to ongoing geopolitical tensions in West Asia, which could disrupt fuel supplies during peak demand months.
Although specific pricing details have not been disclosed, the Gujarat government has set a cap to ensure that tariffs remain competitive and do not exceed the rates paid by other states. This condition aims to balance affordability for consumers while ensuring operational viability for the power producer.
The agreement is subject to approval by the central electricity regulator and is expected to take effect retrospectively from April 2025.
Following the development, Tata Power’s shares rose by over 3% in early trading in Mumbai, reflecting positive investor sentiment around the revival of the Mundra project.
The deal highlights a renewed emphasis on coal-based power as India navigates supply uncertainties and seeks to maintain stable electricity availability across regions.
Coal Power Back in Focus: Gujarat Clears Tata Power’s Mundra Supply Deal
