I skip the chili powder in this recipe but free to add it if you have it on hand. :)
Heat a large saute pan (or a large pot) over medium-high heat. Add the water, mushrooms, bay leaf and seasonings. Stir well and saute for 5 minutes or until mushrooms shrink and release water.
Stir in tomato paste, diced tomatoes, and veggies. Bring to a boil and simmer for 10-15 minutes stirring occasionally (so the liquid reduces and the sauce thickens). Lower the heat slightly if the sauce starts to stick to the bottom and stir more often.
Remove from heat, let cool slightly, and stir in the juice from half a lemon.
Serve with potatoes, rice, pasta, or your favourite starch!