Ranchi, March 24: Essar Power's thermal plant at Mahan in Madhya Pradesh, which had been lying idle for the past 18 months due to want of coal, will now get a fresh lease of life with supply of the key raw material from Tokisud North block in Ramgarh district.

A subsidiary of Essar Power, Essar Power MP Limited won the Tokisud block at the rate of Rs 1,100 per tonne of coal extracted in the recent e-auction of coal mines and got the "vesting order" - a formal allotment letter - from the coal ministry on Monday.

Essar Group has also signed the Coal Mine Development and Production Agreement with the Government of India for the Tokisud coal block besides completing other formalities. It is now in the process of signing long-term Power Purchase Agreements.

A spokesperson from Essar Group's Mumbai office, who did not wish to be named in keeping with company policy, told The Telegraph over phone that formal rights over the Tokisud North block would ensure constant supply of coal to the MP plant. "The development will boost the company's plans for the Mahan project," he said.

Essar Power MP Limited owns and operates the 1,200MW plant at Mahan that was set up with an investment of Rs 8,000 crore. "With the acquisition of the coal mine, the company will commence mining operations to power the Mahan plant within a few months," a source said.

The Tokisud North block, which has all necessary clearances to begin mining, has extractable coal reserves of 52MT. Vital infrastructure like connectivity to the nearest railway sliding, merely 6km away, already exists, which means that time will not be lost on developing the block.

Tokisud North was earlier allotted to GVK Power, but following a Supreme Court directive last September in the wake of the coal block scam, the allocation got cancelled.

As far as Essar Power Jharkhand Limited's Tori project in Chandwa area of Latehar district is concerned, uncertainty looms large after cancellation of earlier allocated Chakla and Ashok Kerketta coal blocks. According to an MoU signed with the state, Essar Power will give 25 per cent of the proposed 1,800MW electricity generated from its plant in Chandwa to Jharkhand.

But no one is sure when and how the project, supposed to be inaugurated in 2013, will shape up.