Tata Power’s Mundra ultra mega power project—shut throughout the second quarter due to unviable tariffs—may soon resume operations, with the company close to signing a supplementary power purchase agreement (PPA) with the Gujarat government. The signing is expected within days, Managing Director and CEO Dr Praveer Sinha told Moneycontrol in its “Latha & The Leaders” series.

Mundra, one of four UMPPs awarded in 2007, has faced prolonged operational disruptions whenever coal prices surged. A fixed-price agreement for Indonesian coal collapsed a decade ago after regulatory changes in Indonesia, leaving the plant exposed to volatile fuel costs. With power demand rising sharply—driven by economic expansion and energy-intensive industries such as data centres—states are now more willing to renegotiate PPAs with Tata Power.

“Once the Gujarat PPA is in place, the four other states have told us they will also agree to the same arrangement,” Sinha said. The plant’s shutdown resulted in losses of about Rs 4.5 billion in the quarter ended 30 September. Mundra currently operates only intermittently when the Gujarat government procures power under Section 11 of the Electricity Act. Under the new PPA, Tata Power is expected to receive a return similar to that granted during Section 11 operations, potentially ending a long period of financial strain for the project.

Separately, Tata Power expects to receive Rs 45 billion from the Delhi government over the next seven years following a Supreme Court ruling mandating the clearance of decades-old regulatory assets.

Sinha added that proposed amendments to the Electricity Act—allowing multiple power suppliers in every area and enabling central support for state distribution reforms—could further benefit the company. Tata Power, which has seen success with Odisha’s distribution companies, plans to bid for additional discoms as states open their networks to private participation.

Overall, improving regulatory clarity, rising electricity demand and overdue financial settlements suggest that India’s power sector is stabilising, with Tata Power positioned to benefit from the shift.