New Delhi: Essar Energy plc on Thursday said it will be signing an agreement to sell one-fourth of the 1,200 MW power to be generated from its Tori station, to Bihar.
"A power purchase agreement (PPA) with the Bihar State Electricity  Board (BSEB) for 300 megawatts of contracted capacity from its 1,200 MW Tori I power station which is under construction in Jharkhand," will be signed, the company said in a statement here.
BSEB has issued Essar Energy's subsidiary Essar Power Jharkhand Ltd (EPJL) a Letter of Intent to purchase the power over a 25-year period and it is expected that a binding PPA will be signed within two months. This follows a competitive bidding process.
"The supply of power under the terms of the PPA will commence from May 2015," Essar said.
Under the terms of the Letter of Intent issued by BSEB, the 300 MW PPA will involve EPJL supplying power at  levelised tariff of Rs 3.28 per kWh or unit, net of transmission costs.
"The PPA, when signed, will be the second 25-year PPA to be agreed with the BSEB for Tori I, following an agreement signed in July 2010 for 450MW of capacity at a levelised tariff of Rs 2.64 per kWh," it said.
Essar Energy CEO Naresh Nayyar said, "This PPA with Bihar will be the latest demonstration of the progress we are making in securing revenues from our investments in power generation in India, where we currently have 1,600 MW of capacity operational and another 8,070 MW under construction."
Tori I, in Latehar district of Jharkhand, is a coal fired power project consisting of two generation units of 600 MW each. Tori II is an additional 600 MW project.
The projects will source coal from the nearby Chakla and Ashok Karkata captive coal blocks, which have been secured for the power project, Essar said.
"Coal mining operations will begin once the outstanding forest clearance and other permissions have been obtained," it said.
EPJL has applied to the Government of India for a temporary coal linkage supply in the event of coal mining operations at the captive coal blocks not commencing in time for commissioning of the power station or to cover any shortfall in coal as production is ramped up at the mines.