GVK Power signs deal with Railways on transporting coal

New Delhi, Dec 11 (IANS) GVK Power Thursday entered into a long-term agreement with the Indian Railways for transporting coal for its upcoming 540-MW thermal power plant at Goindwal Sahib in Punjab.

According to the agreement, the Railways will supply 52-55 rakes for transporting 2.53 million tonnes of coal per annum from GVK's coal fields located at south Karanpura in Jharkand.

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'This agreement will bring approximately Rs.3 billion of revenue to the Railways,' said a senior railway official.

GVK said the Goindwal Sahib plant would be commissioned in mid-2011.

'For this power project, we have already borrowed Rs.30 billion from bank. The prime lender for this project is IDBI Bank,' G.V.K. Reddy, chairman of GVK Group, told IANS.

The ministry of railways has already entered into similar agreements with power majors Rosa Power Supply and Nagarjuna Power Supply.

GVK will pay an additional five percent of the freight charges on each tonne of coal loaded up to annual scheduled quantity of 2.52 million tonnes. Moreover, the company will also pay a bonus of five percent of the freight charges on the additional transported quantity.