The Gujarat government has opted to purchase 1,800 megawatts of power from the Tata Power ultrapower project at a cost of Rs. 4.50 per unit. The unprecedented dispensation to buy power at true variable costs comes at a time when there is a severe power deficit.

Spot electricity costs are expected to fall as a result of the move. Gujarat is one of the major buyers on power exchanges, purchasing approximately 4,000 megawatts every day. Power distribution companies’ desperate bids pushed peak rates on the Indian Energy Exchange to Rs. 20 per unit.

For one week, Punjab has agreed to purchase 500 MW of electricity at Rs. 5.5 per unit from Tata Power’s imported coal-based power plant in Mundra, Gujarat. Because of domestic coal shortage, the majority of Punjab’s coal-fired power facilities are working at reduced capacity.

The decision by the state governments might relieve strain on the domestic coal and aid down electricity exchange rates. The states of Maharashtra, Rajasthan, and Haryana are among the five purchasers of the Mundra project, which was halted when imported coal costs reached $ 150 per tonne. According to the existing contract, the greater generation costs cannot be passed on in the tariff.

Ayushi Mishra

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