The Kerala cabinet late on Tuesday approved the proposal to set up a 2000MW thermal power plant in Orissa as a joint initiative utilising coal from the eastern state's Baitarani fields.
The proposal was firmed up during discussions held here between officials and power board authorities of the two states on Monday.
Power generated from the plant would be shared by the two states, an official release said. It was proposed to be implemented in three phases.
A special purpose vehicle company would be jointly formed by the two state governments for implementing the project.
The Centre had already allotted Kerala, Orissa and Gujarat to prospect coal equivalent to 3000 MW from the Baitarani fields.
Initially, Kerala had thought about setting up a thermal plant in Kasargode district by bringing its share of coal but that plan had to be dropped due to local resistance. Later, the state also considered the idea of building a plant jointly with the NTPC but that also did not work out.
The project estimated to involve a cost of Rs8000 crore when completed in three phases of 650 MW each.