Power crisis: Tata, Adani stand to benefit as states in negotiations for supplementary PPAs

A PPA is a contract between the generator of electricity and the buyer for supply of power.

The additional PPAs would benefit Tata Power and Adani Power due to the 4,400–Mw capacity of plants run by them at Mundra in Gujarat.

The Mundra units for the respective companies have seen some pressure on operational metrics and the additional power being supplied from these units will lead to an improvement in the operational metrics.

Tata Power on Tuesday said that the company is in discussions with all states buying electricity from its plants for "some sort of an arrangement". While negotiations with Gujarat and Maharashtra are in final stages, it expects discussions with other states to conclude in a week to 10 days.

“There is a demand supply gap of power. This year the summer has come very early and also with all industries working at full capacity and offices back in action, there is a huge pressure in terms of the demand of power. As far as our Mundra plant is concerned, we are operating three units right now. Out of the 2,100 megawatt, 1,500 megawatt is going to Gujarat and 600 is going to Maharashtra," said Praveer Sinha, CEO of Tata Power in an interview with CNBC-TV18.

"We are of course discussing with all these states to see that we come to some sort of an arrangement, considering that the coal prices have gone up very much on the higher side and the coal cost has to be a pass-through,” he said.

The company is setting up a 4-GW manufacturing facility, said Sinha, adding that the debt in the Tata Power renewable energy will increase going ahead.

According to Sinha, there are no discussions on IPO for the renewable unit yet.