A thermal power generation facility in Gujarat, which had largely been inactive due to soaring coal prices and the absence of a power purchase agreement, is now set to restart supply after a newly negotiated arrangement approved by Gujarat government. The authorities may extend comparable directives to additional plants and have also established a committee to set benchmark tariffs for the electricity produced.
The government has instructed Tata Power's 4-gigawatt facility fueled by imported coal in the western region of Gujarat to operate at full throttle from April 1 to June 30, citing an increase in summer demand, according to Reuters.
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Power plant restarted to combat summer demand
According to the order seen by Reuters, this decision has been made to ensure sufficient power supply. The generation from plants utilising imported coal must be augmented, as stated in the order. The government may broaden the full-capacity directive to additional imported coal-based facilities between April and June if necessary.
This update arrived as India braces for an unprecedented peak power requirement of roughly 270 gigawatts in the upcoming months, an increase from roughly 242 GW in 2025–26 and aims to enhance production from imported coal facilities to prevent deficiencies.
The facility has remained predominantly inactive for the last six months because of elevated costs for imported coal and the lack of a power supply contract. A committee designated by the government will establish standard rates for electricity generated by the facility.
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Why did the generation stop?
The Mundra power station went offline after the Centre retracted a special provision in June last year that compensated imported coal-fired plants for increased input expenses. This provision was gradually implemented in response to the surging power demand in 2022.
The facility provides electricity to Maharashtra, Punjab, Haryana, and Rajasthan as well, but Gujarat possesses the largest proportion. The complication arose when Indonesia adjusted its coal pricing by tying it to international rates starting in 2011.
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