Mundra Power Plant likely to run at full capacity till December

New Delhi: The power ministry is considering extending Section 11 provisions for the imported coal-based Mundra power plant, that will require the unit to run at full capacity till December amid elevated power demand, said people aware of the matter.

The Tata Power-owned 4,000-mega watt (MW) plant is currently operating under the special provisions, slated to end this month, and the Centre is likely to extend the unit's requirement further under the same in view of the persistent high domestic power demand, according to the people.

The directive will be issued under Section 11 of the Electricity Act, which provides that the government may, in extraordinary circumstances, ask a power generation company to operate and maintain any station in line with its directions, the people said.

The Mundra plant has a supplemental power purchase agreement (SPPA) with Gujarat Urja Vikas Nigam Ltd, while talks are under way with other states. "Discussions with Rajasthan, Haryana and Punjab to sign SPPAs are at an advanced stage," said one of the persons cited above. The plant requires an SPPA to allow a full passthrough of volatile imported coal costs and make the capacity available for supply.

Peak power demand in the country crossed the projected 271 giga watt (GW) in September, unusually high for the month, led by cooling and irrigation demand following a deficit monsoon. Thermal plants play a key role in meeting high power demand, especially during non-solar hours. The projected peak was at 271 GW this year, higher than last year's summer peak of 243 GW.

The power ministry didn't respond to an email query. The cost of imported coal-based power plants is usually higher than those running on domestic fuel. The ministry has invoked Section 11 provisions in the last few years in phases on soaring cooling demand.

Since imported coal-based capacities are needed to meet peak power demand, the Centre has been working on a solution to reduce the cost of operating such plants. The ministries of power and coal have been deliberating on ways to include domestic coal as part of the fuel due to ample supply of higher-grade coal in the country. However, such a mix isn't possible currently due to the thermal plant design.