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Tata Power is back in the spotlight after signing a power purchase agreement with the Gujarat government for its Mundra plant, and the market liked it. The stock moved up on the news.
The background: the Mundra project was originally built to deliver cheap electricity using a large, modern coal-based power plant.
While it has helped power homes and industries, not everyone has benefited. Local fishing communities say the plant disrupted their lives. They reported ash pollution, damage to marine ecosystems, and a sharp drop in fish catch, something that directly impacts their livelihood.
On the business side too, things haven’t been smooth. The plant depended on low-cost coal from Indonesia. But in 2011, Indonesia introduced pricing rules that pushed coal costs higher, making power generation more expensive for Tata Power.
The plant was also not operational for months because the government withdrew an emergency clause that compensated companies for using costly imported coal. This led to losses of around ₹800 to ₹1,000 crore during that period.
Why this matters now: India needs power, and it needs it urgently. With tensions rising in West Asia and fears of gas shortages this summer, the country is looking to squeeze more output from its coal plants. In that context, bringing Mundra back into the mix isn’t just good news for Tata Power, it’s critical for keeping the running households.
India still relies heavily on coal, which powers nearly 70% of its electricity. While renewable energy like solar and wind is growing, it’s not yet enough to meet rising demand, especially during crises when dependable power supply becomes critical.
