Essar Energy bags allocation from MP coal block

London-listed Essar Energy plc today said it had been allocated coal from the Amelia coal block in Madhya Pradesh for fuel supplies to the firm's 1,200 MW Mahan-I power project.

The allocation of a share of coal from Amelia block by the Madhya Pradesh government gives Essar Energy a second source of fuel to supply for Mahan I project, the company said in a statement. The project already has supplies from its Mahan coal block.

However, the company did not state how much quantity of coal will it get from Amelia 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," it said.

The state government has formally notified that Essar Energy and another company, DB Mining Power, will jointly be allocated 40 per cent of the coal from Amelia. The block is being operated by Madhya Pradesh State Mining Corp (MPSMC).

Amelia is estimated to have around 214 million tonnes of coal reserves, according to the 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 has been signed," the statement said.

It added, "The FSA 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."

The company said it still expects to secure a separate shorter term tapering coal linkage arrangement to secure fuel for Mahan I until the Mahan block produced sufficient coal.

The Mahan block will supply fuel to Mahan I, which is due to be completed by March, 2012.