The Indian government has asked private power company Tata Power to restart its 4GW Mundra coal-fired power plant in Gujarat, which relies on imported coal, and to operate the plant at full capacity to cope with the expected surge in power demand during the peak summer power consumption period.
According to senior government officials to Argus, India's Ministry of Power issued relevant instructions under Article 11 of the Electricity Act to Gujarat Binhai Power Company (CGPL), the Tata Power subsidiary operating the plant. The clause gives the government the power to require imported coal-fired power plants to maximize their power generation to meet electricity demand, a request that Tata Power has not yet responded.
The directive comes at a time when India is facing a strong heat wave, which will further push up power consumption. At the same time, the recent conflict in the Middle East has led to a sharp rise in international coal prices, freight and landed costs. Argus reported on March 5 that the Indian government was considering the introduction of Article 11 before the summer.
The previous directive under Article 11 was valid for more than three years and expired on 30 June 2025. The Mundra power plant has been out of service since it completed long-term maintenance last year. The Central Electricity Authority of India (the technical agency of the Ministry of Electricity) predicts that in the summer peak electricity consumption scenario, the peak power gap may reach 10-12GW. The Indian Meteorological Department predicts that despite non-seasonal rainfall in some parts of the country, this summer will be hotter than in previous years, which will drive the use of air conditioners and overall electricity consumption to rise.
At present, the latest directive is only for Mundra power plant, but India has more than 18.7GW of imported coal-fired power generation capacity, accounting for about 9% of the total installed capacity of coal power and 4% of the total installed capacity of the country. Some power plants have recently carried out local coal blending tests. The Indian authorities may consider extending the 11th directive to other imported coal-fired power plants in the future, but this decision will mainly depend on the trend of power demand in summer.
Most of India's imported coal-fired power plants have been in a state of low utilization for a long time because some key long-term power purchase agreements cannot fully cover rising fuel costs. Under Article 11, the authorities usually allow limited cost pass-through, surplus power to be sold on the exchange, and give certain operating concessions.
Supplementary electricity price policy to help power plant restart
Tata Power said the Gujarat government has approved an increase in the price of electricity supplied to the state by the Mundra power plant, allowing higher imported fuel costs to be passed on, creating conditions for the plant to restart capacity. On March 20, Tata Power stated that Gujarat had approved the company to enter into a supplementary power purchase agreement with the state-owned distribution company Gujarat Energy Development Company (Gujarat Urja Vikas Nigam).
Tata Power has been fighting for the approval for several years to offset the soaring cost of imported coal. Higher electricity prices are expected to revive the long-running loss-making power plant, which was put into operation in 2012. Tata Power blamed the continued loss on Indonesia's regulatory policy changes: Indonesia's requirement that coal suppliers sell at a benchmark price sharply pushed up coal prices, breaking the company's long-term pricing expectations for the Mundra power plant.
Tata Power also needs to sign supplementary agreements with other states that purchase electricity from the Mundra power plant, but Gujarat's approval and instructions from the Federal Ministry of Power mean that the power plant, which consumes 10.5 million -11.5 million tons of imported coal a year, is expected to resume operations soon.
The Ministry of Electricity's directive is more of a precautionary measure than an immediate fuel shortage-thanks to strong growth in local coal production and weak demand, India's current coal stocks are at an all-time high, with a combined inventory of nearly 0.22 billion tons in power plants, mines, ports, transportation and storage yards. India's new power generation in summer is expected to be mainly borne by local coal-fired power plants, which are the core pillar of India's power supply, accounting for the vast majority of the country's total power generation.
According to Interocean data from the shipping brokerage company, India imported 0.16015 billion tons of thermal coal in 2025, down 3% year-on-year (down 5.2 million tons), of which power companies purchased about 50 million tons.
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