Calcutta, March 31: The board of power utility Damodar Valley Corporation (DVC) has approved an investment of Rs 1,094 crore in developing the Khagra Joydeb coal block in Birbhum district of Bengal.

With reserves of 103 million tonnes, the coal block was originally allotted to the public sector company for captive use before a Supreme Court directive cancelled the allocation.

DVC later got back the block as part of a fresh allotment process of 42 blocks to central and state PSUs under the provisions of the Coal Mines (Special Provisions) Act. In addition to Khagra Joydev, DVC has secured the Tubed coal block in Jharkhand for captive use.

"DVC's operational performance is improving and to secure raw material to keep generation steady and competitive, efforts are ongoing for coal block development. We are in the process of finalising a mine developer and operator for the block," said a senior DVC official.

The official further said that the development of coal blocks would not only add to its fuel security but also lower its dependence on Coal India.

"There are so many parameters such as quality and price which are not in our control. But, our experience in developing the Bermo mines (Jharkhand) shows that we can get hold of good quality coal at a competitive price," the official said.

Developing a coal block is a capital-intensive exercise involving several steps such as land acquisition and rehabilitation, securing mining equipment, lifting coal and managing overburden.

The Khagra Joydev block will be operational for a period of 30 years and could offer up to 3 million tonnes per annum.

But industry sources said DVC would have to approach cautiously while developing the block given its previous experience.

In 2012, land protests in Loba had turned violent when villagers had confiscated one earth-mover which was then used by DVC-Emta Coal Mines, a joint venture company formed for developing the coal block.

This time, however, the block is directly allotted to DVC which means the company will have to develop the block under the mine developer and operator (MDO) model.

DVC last week had inked a five-year memorandum with Rural Electrification Corporation (REC) to finance its ongoing and future projects.

The agreement could see potential financing across Rs 1,800 crore worth of planned projects of DVC in the coming years.