The MoU was signed by Principal Secretary (Energy) Vivek Dhand and the Chhattisgarh State Electricity Board Secretary on behalf of the state government and Balco Chairman S P Baid on behalf of the Vedanta Group last night.
Chief Minister Raman Singh and Vedanta Group Chairman Anil Agrawal were present.
The Vedanta group is required to submit a detailed action plan to the government within 60 days of signing the MoU. A provision has been' in the MoU for completion of the project in a time-bound manner.
The state government will be entitled to buy 30 per cent of the electricity generated, while the company will be free to sell the rest to any buyer.
Besides, the company will be required to sell seven per cent electricity generated at production cost to the government.
Mired in a controversy over allegedly encroaching on 1,000 acres of prime land and cutting down thousands of trees, Balco has set up a 550 MW power plant in the state's Korba district earlier.
After internal consumption, power generated was being sold to the state government. Later, Mr Agrawal said the Vedanta Group will consider investing Rs 10,000 crore aluminum plant on the lines of Balco besides encouraging small aluminum-based industries and cooperating in establishing an aluminum park.
He claimed that the group could not earn Rs 100 crore profit from Balco so far despite investing Rs 5,000 crore and the company did not constitute even 15 per cent of the group's total business.
Vedanta Group had acquired 51 per cent stake in Balco through its company Sterlite during previous NDA rule, while the government still owns 49 per cent shares.
The group recently had made a proposal to acquire rest of the shares but the deal could not materialise in view of pressure by Left parties.
Mr Agrawal dodged questions on land grabbing and cutting of trees saying he did not possess much information about the matter.
He informed that he accepted the request of the CM to set up a ultra-modern cancer hospital with equal participation in a bid to expand health services in the state.
The group will also provide financial support for development of tourist spots at Mainpat and Kawardha.