The share price of the largest power company in India soared following news that it has signed a Supplementary Power Purchase Agreement (SPPA) with the western Gujarat state for its 4-gigawatt Mundra plant.
On Friday, Tata Power Limited hit ₹416.90, up by 4.62% from the previous closing price of ₹398.5. The stock is currently trading for ₹414.95, up by 6.08% over the past five trading days.
Supplementary Power Purchase Agreement
Tata Power rallied after the Gujarat government approved the SPPA that will enable the Mundra power plant to resume operation and provide electricity.
“On Wednesday, 18th, [the] Gujarat government has approved the SPPA,” Tata Power CEO Praveer Sinha told NDTV Profit.”The same PPA will also get finalized with the other procurer states, for which we have been in discussion with them.”
Losses Due to Suspension of Mundra Plant
In October, the company announced that it temporarily suspended the operation of its units in Mundra after the government withdrew the emergency clause that compensated companies that use imported coal to generate power.
Following the release of Tata Power’s quarter results last month, Tata Power CEO and managing director Praveer Sinha revealed that the extended six-month closure of the power plant led to losses of nearly ₹800 crore.
Maximizing Power Output Amid Shortage Concerns
The development comes as the nation anticipates increased power demand during the summer. The Mundra plant is expected to help in maximizing power output from Indian coal plants amid the geopolitical tension in the Middle East that raises concern over power shortage.
“I think this will also pave the way for 4GW of power to be supplied…This is one of the most efficient plants in the country, the power supply will be at a very, very economical rate in the merit order,” Sinha said.
Source: https://coinpaper.com/15582/tata-power-shares-rise-after-mundra-plant-restart-approval
