Indian power utility Tata Power has entered into a long-term coal supply agreement with Indonesian company PT Antang Gunung Meratus (AGM), a subsidiary of PT Baramulti Sukses Sarana (BSSR).

As part of the agreement, AGM’s affiliate Khopoli Investments will have an option to acquire about a 26% stake in BSSR in order to secure the coal supplies.

AGM and BSSR together own about 1 billion tons of coal resources in South and East Kalimantan in Indonesia.

Tata Power managing director Anil Sardana said this coal supply agreement is a strategy to support the company’s growth agenda.

"It would support our upcoming power projects based on imported coal to be developed over the next 5 years."

Under the deal, Tata Power can also purchase about 10 million tons of coal per annum.

Tata Power already has 30% equity stakes in two major Indonesian thermal coal producers, PT Kaltim Prima Coal and PT Arutmin Indonesia, and a related trading company owned by PT Bumi Resources Tbk.