Tata Power Plans to Sign Agreement with Four States Allowing Power Prices to Be Linked to Coal Costs

Tata Power's CEO Praveer Sinha stated that the company expects to sign agreements with four states in India, allowing its 4 GW power plant located in Gujarat to sell electricity at prices that reflect costs in response to rising coal prices. Tata Power has been seeking to adjust electricity prices to ensure the continued operation of the Mundra plant. When the company won the bid to construct the plant in December 2006, it agreed to sell electricity at a fixed price, using coal imported from Indonesia as fuel. In 2010, Indonesia adjusted its coal pricing rules, linking coal prices to international benchmarks, leading to increased fuel costs that the original electricity prices could not cover. As a result, the plant has incurred losses for several consecutive years and has been forced to operate below capacity.