Gujarat approves Tata Power PPA; Mundra plant all set for restart

New Delhi: Gujarat has approved the signing of a supplemental power purchase agreement (SPPA) with Tata Power, paving the way for its 4,000-MW imported coal-based Mundra power plant to restart operations as early as next week.

"The Gujarat cabinet has approved the supplementary PPA and a government order has been issued," Tata Power said in a notice to stock exchanges. "After regulatory clearances, the company and Gujarat Urja Vikas Nigam Ltd (GUVNL) will sign the agreement."

Financial details, including the revised tariff, were not disclosed. The deal is expected to provide operational stability to the project while securing power supply for the state ahead of peak summer demand.


The SPPA revises some commercial terms in the original 2007 power purchase agreement between Gujarat Urja Vikas Nigam and Tata Power to address cost pressures arising from imported coal-based generation, a person familiar with the development said. It provides some concessions in operating parameters to the company. The tariff could be based on an agreed coal index provided by both parties, one of the persons cited above said.

The 5X800 MW Mundra ultra mega power project had gone offline after the Centre in June last year withdrew a special provision that compensated imported coal-fired plants for higher input costs. The provision was introduced in phases amid rising power demand in 2022.

The plant supplies electricity to Maharashtra, Punjab, Haryana and Rajasthan as well, but Gujarat has the largest share. Its issue arose when Indonesia changed its coal prices by linking it to international rates with effect from 2011.