BHEL and Maharashtra State Power Generation Company (Mahagenco) have inked an agreement on 12 August 2009 to set up a JV company which will construct a coal based 1,320 MW thermal power plant at Latur in Maharashtra.

The JV is likely to build two 660 MW coal-fired thermal units at an outlay of Rs 7,000-7,500 crore. The plan also envisages an alternative arrangement of setting up 1,500 MW gas based power plant in the absence of an adequate coal linkage.

Initially, BHEL and Mahagenco will hold 50 per cent stake each, which may later be reduced to 26 per cent each, by offering the remaining shares to financial institutions and other partners.

Work on the project is likely to commence in six months time as land acquisition and other mandatory clearances are expected to be completed soon. Unit I of the power plant is expected to come up within 48 months of the order being placed with BHEL.