Tata Power resumes operations at Mundra plant after nine-month hiatus
Mumbai: After a nine-month shutdown, Tata Power on Wednesday resumed operations at its Mundra power plant in Gujarat, which had been idled due to financial strain caused by a surge in imported Indonesian coal prices and the expiry of government subsidies under Section 11 on June 30, 2025. The 4,150 MW facility, India’s third-largest, was awarded to the company in December 2006.
The restart follows the signing of a supplementary power purchase agreement with the Gujarat government, designed to restore the plant’s economic viability by allowing fuel cost pass-throughs instead of the fixed-price structure of the original December 2006 bid. Tata Power also plans to sign similar agreements with the governments of Maharashtra, Punjab, Haryana, and Rajasthan.
The shutdown took a heavy toll on the company’s balance sheet. After merging the loss-making Coastal Gujarat Power—which operated the Indonesian coal-fired Mundra thermal power station—into Tata Power in 2022 to save on taxes and directly fund the plant, the company had to absorb the plant’s fixed expenses without corresponding revenue. This resulted in a Rs 800 crore loss for the unit during the first nine months of fiscal 2026.
With the new power purchase agreement in place with Gujarat and similar agreements with other off-takers in the pipeline, the Mundra project is expected to stabilize Tata Power’s thermal portfolio.
The restart follows the signing of a supplementary power purchase agreement with the Gujarat government, designed to restore the plant’s economic viability by allowing fuel cost pass-throughs instead of the fixed-price structure of the original December 2006 bid. Tata Power also plans to sign similar agreements with the governments of Maharashtra, Punjab, Haryana, and Rajasthan.
The shutdown took a heavy toll on the company’s balance sheet. After merging the loss-making Coastal Gujarat Power—which operated the Indonesian coal-fired Mundra thermal power station—into Tata Power in 2022 to save on taxes and directly fund the plant, the company had to absorb the plant’s fixed expenses without corresponding revenue. This resulted in a Rs 800 crore loss for the unit during the first nine months of fiscal 2026.
With the new power purchase agreement in place with Gujarat and similar agreements with other off-takers in the pipeline, the Mundra project is expected to stabilize Tata Power’s thermal portfolio.
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