Steel Authority of India Limited  and Larsen & Toubro today signed a memorandum of understanding  to jointly set up, develop, manage and own captive  independent power plants to meet the future power requirements of SAIL.

The two companies also agreed to explore opportunities to own captive thermal coal blocks to cater to the power plant requirements.

The  memorandum of understanding  was signed by A K Jain, executive director, corporate planning, SAIL, and R K Sharma, vice president and head (thermal project development in Delhi today.

The MoU is a precursor to the joint venture agreement between SAIL and L&T for the incorporation of the joint venture company. Both the parties plan to enter into a JV agreement within three months from the date of signing of MoU. The JV company will also identify and locate potential thermal coal blocks, which will facilitate in identifying a suitable location for the power project.

Both the companies will jointly set up a 1600 MW (2 X 800 MW) green-field coal-based captive / independent power plant using super critical technology. The companies will keep the option to further expand capacity by 800 MW / 1600 MW at the same or some other location.

The agreement is a significant strategic intervention. The power requirement for the SAIL plants is currently being met primarily through inhouse / captive power plants, including those with JV companies.

The remaining requirement is met through distribution companies of the respective grids. SAIL's power requirement is likely to increase from the present level of 950 MW, to about 1826 MW by 2010, and 4066 MW by 2020.

Speaking on the occasion, Roongta remarked that this initiative would be a trend-setter for developing large thermal power plants through Public-Private partnership.

Naik stated, "A cherished dream of mine for setting up large plants in joint venture with a premier navratna company like SAIL has come true today."