Prime Highlights

• The government has instructed Tata Power to run its Gujarat-based plant at full capacity to meet rising summer electricity demand.
• The move aims to prevent power shortages and ensure a steady supply for industries and households during peak months.

Key Facts

• The Mundra Power Plant has a capacity of around 4 GW and runs on imported coal, making it one of India’s largest private thermal power plants.
• The directive is expected to be in force during the high-demand period from April to June, when electricity consumption typically reaches its peak.

Background

The Indian government has directed Tata Power to operate its 4-gigawatt Mundra plant in Gujarat at full capacity from, ahead of what is expected to be a record-breaking summer for power demand.

The directive comes as India prepares for peak power demand of around 270 gigawatts in the coming months, up from roughly 242 GW a year ago. The grid managers are leaving no margins for the gap between supply and demand in view of the growing temperature, as well as industrial consumption.

The Mundra plant, which Tata Power operates through its subsidiary Coastal Gujarat Power, generates 25 percent of the company’s total electricity capacity, which reaches 16 gigawatts.  Its restart carries significant weight for multiple states — the company supplies electricity from the plant to Rajasthan, Maharashtra, Haryana, and Punjab.

The plant had been sitting idle for around eight months. It was shut down after the power ministry withdrew emergency compensation for high fuel costs, a move that left the company absorbing the rising price of imported coal. The new power-purchase agreement allows coal cost pass-through, finally solving the major financial dispute that kept the plant offline.

Gujarat’s cabinet approved a supplementary power purchase agreement, following which the state government issued a formal government order. Tata Power is now expected to sign similar agreements with Maharashtra, Rajasthan, Punjab, and Haryana in the coming weeks.

The government has also indicated it may extend the full-capacity mandate to other imported coal-based plants between April and June if required, a sign that policymakers are watching supply closely as the summer heat sets in.