Tata Power has told NDTV Profit it is gearing up for the immediate restart of its massive Mundra imported coal-based plant after securing crucial regulatory approvals, a move that is likely to erase hundreds of crores in cash losses for the company.
The breakthrough comes after the state government greenlit a Supplemental Power Purchase Agreement (SPPA), allowing the plant to resume operations and supply much-needed electricity ahead of peak summer demand.
"On Wednesday, 18th, Gujarat government has approved the SPPA and we are now in the process of signing it with the DISCOM over there, GUVNL," Mr. Sinha of Tata Power told NDTV Profit.
"And the same PPA will also get finalised with the other procurer states, for which we have been in discussion with them. And I think this will also pave the way for 4 GW of power to be supplied. And as this is one of the most efficient plants in the country, the power supply will be at a very, very economical rate in the merit order."
A key component of the new agreement resolves the financial bottleneck that previously forced the facility offline.
"One of the significant things is that the cost of coal is a pass-through," Sinha explained. "So whatever is the cost of coal that is being used in this plant is, it will be a pass-through, which was a problem for the generating company."
The financial turnaround for Tata Power is expected to be immediate and substantial.
"So when the plant was not operating for 9 months, we had a loss on the plant, on the Mundra plant of nearly 800 to 1,000 crores. So that loss will not happen. We will become cash-positive," he said.
He added that the restart "will help in our EBITDA, which will support us in generating internal cash for the new growth that we are doing not only in renewable but also in our hydro plants and transmission and distribution."
Sinha confirmed the financial benefits will be realised immediately, as the plant is slated to resume generating power "next week onwards."
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