India Orders Tata Power Gujarat Plant to Run at Full Capacity | Coal Power News
Novel Delhi – India’s Ministry of Power has ordered Tata Power to operate its 4-gigawatt imported coal-fired power plant in Mundra, Gujarat, at full capacity between April 1 and June 30, a directive issued in response to forecasts of record summer electricity demand.
The order, communicated to Tata Power on Monday, aims to ensure adequate power availability as peak demand is projected to reach approximately 270 gigawatts in the coming months, a significant increase from the 242 gigawatts recorded in 2025-26. Government officials cited concerns about potential shortages during the summer months as justification for the directive, according to a government order seen by Reuters.
The Mundra plant, which had been largely inactive due to high imported coal costs and the absence of a long-term power purchase agreement, will resume full-scale supply following a revised arrangement approved by the Gujarat state government. The Gujarat cabinet approved a supplemental power purchase agreement (SPPA) with Tata Power last week, clearing the way for the plant’s restart. Financial details of the revised agreement were not disclosed, but sources indicate it addresses cost pressures related to imported coal.
The directive from the Ministry of Power may be extended to other imported coal-based plants across India if necessary between April and June, officials indicated. A committee has also been established to determine benchmark tariffs for power generated from the Mundra plant, ensuring a fair pricing structure for both Tata Power and Gujarat Urja Vikas Nigam Ltd (GUVNL), the state’s power distribution company.
The resumption of operations at the Mundra plant comes amid a broader energy landscape shift in India. A recent disruption in the Middle East, including a blockade in the Strait of Hormuz, has tightened the supply of Liquefied Petroleum Gas (LPG), prompting the government to allow restaurants and hotels to temporarily switch to coal, kerosene, and biomass to prioritize domestic LPG consumption. Increased electricity demand, partially driven by households switching to electric cooking as a fallback option, is further straining the power grid and reinforcing coal’s role as a critical energy source.
While solar and biogas projects are expanding in India, their scalability remains insufficient to address immediate energy shortages. In 2023-24, coal accounted for nearly 79% of India’s domestic energy supply, highlighting the country’s continued reliance on the fuel source. The 5×800 MW Mundra ultra mega power project had been offline since June of last year when a provision compensating imported coal-fired plants for higher input costs was withdrawn.
Tata Power has indicated that the plant will resume operations as early as next week, pending final regulatory clearances. The company has not yet commented on the potential for extending operations beyond the initial April 1 to June 30 timeframe, or on the specific terms of the benchmark tariff to be set by the government-appointed committee.