GMR Energy, the holding company of GMR group's power business, said on Tuesday it will set up a 1,000 MW coal-based power project in Chhattisgarh.

With this project, the GMR Group now has projects with a total capacity of about 830 MW under operation and projects with 2,440 MW capacity in various stages of development, GMR Infrastructure [Get Quote] informed the Bombay Stock Exchange.

GMR Energy, a subsidiary of GMR Infrastructure, signed a memorandum of understanding with Chhattisgarh government for setting up a 1,000 MW power plant.

The detailed project feasibility studies are expected to begin in a fortnight. Chhattisgarh government would provide all necessary assistance toward the development of the project and give all incentives which other industrial projects receive, GMR added.

As per the memorandum of understanding, Chhattisgarh is entitled to avail five per cent of net energy annually at variable cost as determined by the appropriate regulatory commission in case the company gets a coal linkage and 7.5 per cent if it gets a coal block.

Chhattisgarh has the right to purchase up to 30 per cent of power from the project for 20 years through its nominated agency. Shares of GMR Infrastructure were trading at Rs 499.55, up 2.35 per cent on BSE in afternoon trade.