The Chhattisgarh government is set to approve Essar group's Rs 40 billion proposal for a 1,000 MW coal-fired power plant in the state's northern region that has 20 percent of India's coal deposits.
"The Essar proposal for a power plant should be hopefully finalised within a month after some formalities are completed," a top energy department official said.
The plant would come up in the coal abundant Korba district, to feed power to its upcoming steel project in Dantewada.
The group had in June last year signed a deal with the government for setting up a 3.2 million tonnes per annum capacity steel plant with an investment of Rs 70 billion in the Maoist affected Dantewada district.
According to the official, Essar wants to pump in Rs 80-90 billion in the state's power sector with total generation capacity of 2,000 MW.
"But we have agreed to initially sign the memorandum of understanding (MoU) for 1,000 MW within a month. However, Essar is still requesting for a 2,000 MW plant," he said.
Investments of Rs 440 billion in the power sector from public and private players are in the offing, he added.
"The state will begin generating an additional 12,000 MW by 2011 as several companies will complete the ongoing installation work."
Chhattisgarh's BJP government claims that the state has the potential to meet India's growing energy demands for the next 100 years with the total power generation capacity of up to 100,000 MW.