Essar Energy Plc said on Thursday that it has been allotted a share of coal from the Amelia coal block by the Madhya Pradesh government. The coal will provide fuel to the company's Mahan I power project.
The allocation gives Essar Energy a second source of fuel to supply Mahan I, a 1,200-megawatt (MW) power project, in addition to Essar's existing Mahan coal block.
“The addition of Amelia will significantly extend coal availability from Essar's captive blocks for Mahan I from the current estimate of approximately 12 years. Both blocks are within very close proximity to the power project,” the company said.
The State government has formally notified Essar Energy and another company, DB Mining Power, that they will jointly be allocated 40 per cent of the coal from Amelia, which has been allocated to and will be operated by the Madhya Pradesh State Mining Corporation (MPSMC).
Amelia is estimated to have around 214 million tonnes of coal reserves, according to the Union Ministry of Coal.
The block still requires environmental and other approvals before mining operations can begin.
Essar Energy will be supplied with its entitlement of coal from Amelia by MPSMC under a long-term linkage arrangement once a Fuel Supply Agreement (FSA) has been signed.
“The fuel supply agreement is expected to be signed once the required environmental and other approvals have been obtained. The coal will be supplied at prevailing Indian coal linkage prices,” Essar Energy said in the statement.
The company also expects to secure a separate shorter term tapering coal linkage arrangement to secure fuel for Mahan I until the Mahan block produces sufficient coal.