Tata Power delays shutdown of Mundra plant, normal operations till Mar 20

In a last-minute decision, private power producer Tata Power postponed the shutdown of its Mundra power plant by nine days to March 20. In an earlier notice sent to five states that procure power from the plant, Tata Power had set Wednesday as the date of closure of the Gujarat-based plant.

Tata Power supplies power to five states — Maharashtra, Gujarat, Rajasthan, Punjab and Haryana — from the 4,000 megawatt (Mw) plant. The firm had sent the shutdown notice to the states because of delay by states in adopting the High Powered Committee (HPC) recommendations and entering into supplemental power purchase agreement (PPA) for higher tariff.

The decision to postpone came after a meeting was convened by the Union power secretary on Monday. 

“The meeting was attended by all the five States’ energy secretaries and officials, and the contours of an acceptable solution were discussed,” said Tata Power, in a statement it issued on Wednesday.

Another meeting is expected to be convened in the next 10 days to arrive at a decision on or before March 20. “There were certain legal and contractual issues discussed pertaining to the PPA in light of the earlier and subsequent Supreme Court orders, which all parties have agreed to,” Tata Power said.

Coastal Gujarat Power (CGPL) will now wait for the March 20 decision and normal operations will continue till then, “Given the positive discussions in this (Monday) meeting and the intent expressed by all parties to arrive at an acceptable solution”, the company said.

In October 2018, the Supreme Court directed the Central Electricity Regulatory Commission (CERC) to review PPAs signed by states for power procured from Tata Power, Essar Power, and Adani Power’s Gujarat-based plants. 

Praveer Sinha, chief executive officer CEO) and managing director (MD) of Tata Power, had back then added that he expected the new resolution to help halve Mundra’s losses. The procuring states were expected to seek Cabinet approvals and approach CERC with the new tariff, which so far has been pending.

Tata Power added, “The notices (to stop power supply) still remain valid and CGPL will consider appropriate decision on the notice of closure based on the outcome of these meetings”. It remains reasonably confident of arriving at a solution in the next few weeks to avoid closure, the firm said.

For financial year 2018-19 (FY19), the Mundra unit’s annual loss was Rs 1,700 crore. The company expects losses for the current financial year to narrow down to Rs 900 crore, thanks to better fuel management, blending of coal, and lower coal prices.