Thermal Powertech Corporation India Ltd has signed a fuel supply agreement with Mahanadi Coal Fields Ltd, a subsidiary of Coal India Limited.

TPCIL is in the advance stage of setting up a 1,320 MW coal-fired generation plant with 2 units of 660 MW each in Krishnapatnam, Nellore district of Andhra Pradesh.

The plant has been designed to run on 70 per cent domestic coal and 30 per cent imported coal. The imported coal requirement will be met through the company’s coal supply agreement with PT Bayan Resources of Indonesia. It was secured in February 2012.

The company is a joint venture between Gayatri Energy Ventures Private Limited, a wholly owned subsidiary of Gayatri Projects and Singapore based SembCorp Utilities, a wholly owned subsidiary of SembCorp Industries.

T.V Sandeep Reddy, Managing Director of Gayatri Projects Ltd, in a statement said, "Given the criticality of coal availability for the smooth running of the plant, this agreement with MCL is a major step in ensuring continued operations post commencement of our facility at Nellore."

Under the agreement signed for annual contracted capacity of 2.13 million tonnes per annum, MCL would be supplying coal to TPCIL’s plant for a period of 20 years starting from the commissioning of the plant during financial year 2014-15.

This development is an important milestone for the company in meeting its coal requirement. Fuel being one of the most critical elements in the power supply chain, this agreement provides an assured quantity of coal supply for the next 20 years.

"This would help us in supplying competitive power to consumers and serve the severe power deficit in the southern region and other parts of India," he said.