Essar Power has commenced operation on the Unit I of the 1,200 MW Mahan plant in the Indian state of Madhya Pradesh after securing coal to run the operations.

The plant was closed for 17 months after the apex court in India cancelled the Mahan coal blocks.

During the recent special forward e-auction launched by Indian government, the company won a captive coal mine in Tokisud in Jharkhand state, securing supply of 300000 tonnes of coal.

Essar Power executive vice chairman Sushil Maroo said: "We are thankful to the Government for making coal available through e-auctions and aligning coal prices to the current market scenario.

"It has increased the production and supply of coal, which is a welcome move for the power sector and will help other stranded power projects."

Mahan power plant has been built at a cost of 100bn ($1.4bn), which requires an estimated 5.5 MTPA of coal per year.

The company believes that dip in coal prices and winning captive mine will help in running the operations of the plant smoothly.

Essar Power MP CEO KVB Reddy said: "We are optimistic that with the availability of coal, the Mahan plant will now run optimally on a sustained basis. We are also confident of commissioning Unit II by September this year.”

Unit I of the Mahan power plant started operations April 2013 but it was forced to stop operation due to non-availability of coal.

In order to ensure long term availability of coal, the company has requested the government to give nod for tapering linkage from the nearest colliery, Northern Coalfields.

The company said to have signed long term power purchase agreements and it is looking to sign more agreement to supply power from the plant.

Essar Power owns power plants in India and Canada with a total generation capacity of 6,100 MW, out of which 4,675 MW is operational.