Tata Power’s Mundra plant to bring relief to worst-hit states

The move is expected to reduce spot electricity prices to some extent as Gujarat is one of the top buyers on power exchanges off-taking about 4,000-Mw daily at about Rs 13 per unit. Desperate bids by power discoms in the wake of low domestic coal availability at power plants has pushed peak prices on

to Rs 20 per unit.

The special dispensation to buy the power at actual variable costs comes in the backdrop of a severe power crisis as imported coal-fed plants supplying to the state stopped generation due to higher fuel costs, sources said.

ET was the first to report on October 12 that Punjab has agreed to take 500-Mw electricity at Rs 5.5 per unit from Tata Power’s imported coal-based power plant at Mundra in Gujarat for one week. In 2007, Tata Power won the bid for the Mundra Ultra Mega Power Plant (UMPP) at a price of Rs 2.26 per unit.

The state governments’ move could reduce pressure on domestic coal and help bring down prices on power exchanges, as urgent buying by stretched states had pushed up spot electricity prices. Sources said Punjab’s own power generation cost is around Rs 4 per unit.

Most of Punjab’s coal-fired power plants are operating at low capacity due to domestic coal shortage, resulting in power outages and restrictions on consumers.

Maharashtra, Rajasthan and Haryana are among the five consumers of the Mundra project that stopped operations as imported coal prices touched $150 per tonne. The higher generation cost cannot be passed on in the tariff as per the existing contract.

The sources said the project has imported coal-stock sufficient to run for one month.

“We have conveyed to the company that the power should be made available from October 12 to October 19. This is only an intermediary arrangement looking into the power shortage in Punjab. After that the coal supplies are expected to pick up, and weather conditions will also become favourable,” a Punjab government official had said.