Govt invokes Section 11, orders Tata's Mundra ICB plant to run at full capacity to meet summer demand surge

New Delhi: The Ministry of Power has ordered Coastal Gujarat Power Ltd (CGPL), the Tata Power-owned operator of the 4 GW Mundra Imported Coal-Based (ICB) plant in Gujarat, to restart generation and run at full capacity for the April-June period to meet the summer power demand surge.

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Citing the “prevailing demand–supply scenario” and the expected rise in electricity demand in the coming summer months in India, the ministry issued the direction on March 22 under Section 11 of the Electricity Act, 2003, saying imported coal-based generation needs to be enhanced “in the larger public interest and to ensure optimal availability of power.”

ICB plant must run on full-capacity to meet peak power demand

The order says the CGPL imported coal-based power plant “shall operate and generate power to their full capacity.” It further says the arrangement will remain valid “from 01.04.2026 to 30.06.2026” and adds that similar directions may be extended to other plants, if required.

The Mundra plant had ceased operations last year, but it has now executed supplementary Power Purchase Agreements (PPA) with Gujarat Urja Vikas Nigam and with utilities in Maharashtra, Rajasthan, Punjab and Haryana, giving the plant a fresh procurement base as the ministry pushes to shore up supply during the summer months.

Pricing, payments and surplus power

The ministry has set out a payment framework under which a committee comprising officials from the ministry, the Central Electricity Authority (CEA) and NTPC will work out benchmark rates. The committee is to ensure that the rates cover “all the prudent costs of using imported coal for generating power, including the present coal price, shipping costs and O&M costs, etc and a fair margin.”

The order says fixed charges will follow the power purchase agreements or any mutually agreed terms with procurers. It also gives procurers an option to pay either the benchmark rate or a mutually negotiated rate. Any surplus power beyond PPA commitments is to be sold on power exchanges, while un-scheduled power can also be offered to other distribution licensees or sold on exchanges, subject to the conditions laid down in the order.

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Strict compliance, weekly reporting and stock norms

The direction also tightens operational compliance. It says the generator must maintain coal stock in line with extant norms so that the plant can run at full capacity, submit weekly reports to the ministry on generation and sale, and honour payment security provisions under the PPAs, including letters of credit or advance payment. If the order is not complied with, the ministry says, “penalty may be imposed as per the provisions of the Electricity Act, 2003.”

The benchmark rates are to be reviewed every 15 days, taking into account changes in imported coal prices and shipping costs. The ministry has also said that if the plant is made available under the Section 11 direction, no penalty can be imposed by procurers on account of availability under the PPA, and that the plant must operate despite any prior outstanding dues, which will be dealt with separately.

The CEA has projected a peak power demand of 289 GW for FY2026-27, significantly higher than the peak power demand of 245 GW recorded in FY2025-26.

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