Tata Power share price surged by 5% on Friday, March 20, following reports that the Gujarat government has sanctioned a modified Power Purchase Agreement (PPA) with Tata Power, enabling the company to restart long-term supply from its 4-gigawatt Mundra facility.
As stated in a government document reviewed by Reuters, the report reveals that the imported coal-fired plant has not been operational for the last six months following the government’s withdrawal of the emergency clause last year, which provided compensation to companies for generating electricity with costly imported coal.
This agreement provides relief to India, which aims to maximize electricity production from its coal facilities, especially amidst a rising conflict in the Middle East that is anticipated to cause a gas shortage during the summer.
The agreement awaits approval from the federal power regulator and is set to be applied retroactively from April 2025.
According to a news report by Reuters, specific information on the pricing of the power supply remains unavailable, but Gujarat has established that the cost cannot surpass that of other states, according to a government document.
(more to come)