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Informist, Wednesday, Dec. 24, 2025

 

--Sources: Tata Power seeks 10-yr power purchase pact to restart Mundra plant

--Sources: Gujarat govt offers Tata Power 25-yr purchase pact for Mundra unit

--Sources: Tata Power seeks 10-yr pact for Mundra to meet zero emission aim

--Sources: Tata Power's 4GW Mundra plant unlikely to restart ops by Dec 31 

--CONTEXT: Tata Power management keen to restart Mundra plant by Dec 31

--Sources: Transfer of Gujarat officials may also delay Tata Power Mundra ops

 

By Sunil Raghu

 

AHMEDABAD – Tata Power Co. Ltd. and the Gujarat government, which had largely resolved all issues and agreed to restart the 4,000-megawatt Mundra ultra mega power plant, seem to have hit a new roadblock. The Tata Group company, which was hoping to restart operations at the plant by the end of December, is learnt to have expressed reservations over the state's proposed 25-year power purchase agreement for the plant, two Gujarat government officials told Informist.

 

"Tata Power wants to sign the PPA (power purchase agreement) for 10 years and not 25 years as proposed by Gujarat government," a senior state government official said. "Tata Power officials say they may not want to run this imported coal-based power plant beyond 10 years as they need to meet their target of net zero carbon emissions at the company level by 2045."

 

As per media reports, the Tata Group has announced its intent to become carbon-neutral and aims to be Net Zero emitter across all its major companies by 2045, focussing on decarbonisation and renewable energy. The key actions include achieving 100% renewable electricity by 2030, reducing emissions intensity, investing in green tech like direct reduction plants for steel in Tata Steel Ltd., promoting electrical vehicles by Tata Motors Ltd., and setting specific targets for each business like Tata Communications' 2035 Net Zero goal and 2045 for Tata Steel and Tata Power Ltd.

 

The Gujarat government and Tata Power have been in talks for nearly four years to reach an agreement on several vexed issues and sign a new power purchase agreement to keep the Mundra power plant running regularly. The plant has been operating intermittently over the past 15 years. The proposed restart of Tata Power's Mundra plant is contingent on signing the new power purchase agreement.  

 

Tata Power had bagged the Mundra project through its wholly-owned subsidiary, Coastal Gujarat Power Ltd., via competitive tariff-based bidding in 2006, quoting 55% of the fuel cost as a fixed component and a levelised tariff of INR 2.26 per unit. Coastal Gujarat Power, which has since been merged with Tata Power, signed a similar power purchase pact with Gujarat, Rajasthan, Maharashtra, Punjab and Haryana for supply of power. The other four states are expected to broadly follow the PPA norms finalised with the Gujarat government.

 

Tata Power used imported coal from Indonesia to fire the Mundra plant. The dispute arose when Tata Power began incurring additional cost as Indonesia levied duties on coal export. Tata Power sought to pass on this additional coal cost but was opposed by the states with signed PPAs, as the agreements did not allow pass-through of increases in imported coal costs. After litigation across multiple forums, the Supreme Court in February 2022 approved a settlement between Gujarat Urja Vikas Nigam and Tata Power.

 

Recently, Tata Power officials were said to have mostly agreed with Gujarat government officials and exchanged draft power purchase agreements after sorting out most of the issues, paving the way to restart the Mundra power plant. Tata Power officials have been saying they want to restart the power plant by Dec. 31 and wanted the state government to finalise and sign the PPA before that.

 

Restarting operations at the plant is crucial, as the Mundra power plant accounts for nearly one-fourth of Tata Power's total electricity generation capacity of 16 gigawatts. The plant, which has five supercritical units of 800 MW each, accounted for INR 112.9 bln, or 17.5%, of the company's consolidated turnover of INR 645.02 bln in 2024-25 (Apr-Mar).

 

"Now with Tata Power seeking a shorter duration, the agreement may take a little bit more time beyond Dec. 31 as Gujarat government has appointed new energy secretary and managing director for Gujarat Urja Vikas Nigam Ltd. on Tuesday," a senior state government official said.

 

At 1452 IST, shares of Tata Power traded at INR 379.20 on the National Stock Exchange, down 0.8% from the previous close.   End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Vandana Hingorani

 

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