Tata Power to restart Mundra plant after new deal, aims to end losses
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Tata Power is set to restart its 4 GW imported coal-based Mundra plant next week after securing key approvals, a move expected to reverse significant cash losses and improve its financial performance.
The restart follows approval of a Supplemental Power Purchase Agreement by the Gujarat government.
The company is now in the process of signing the agreement with Gujarat Urja Vikas Nigam Limited, with similar arrangements being finalised with other procuring states.
Company officials said the agreement resolves a major financial hurdle by allowing coal costs to be treated as a pass-through, addressing a key issue that had previously made operations unviable.
The Mundra plant had remained non-operational for around nine months, during which Tata Power incurred losses estimated between Rs 800 crore and Rs 1,000 crore. With operations resuming, the company expects to become cash positive and eliminate these losses.
The restart is also expected to boost the company’s earnings before interest, taxes, depreciation, and amortisation, strengthening its ability to fund future growth. Tata Power said the improved cash flow will support investments in renewable energy, hydro projects, and transmission and distribution networks.
Officials added that the plant, considered among the most efficient in the country, will supply power at competitive rates and help meet rising electricity demand during the peak summer period.