The agreement is the biggest since February's demerger and follows a $120m (pounds 75m) deal last month to buy Citizens Lehman Power, a US power trading company.
The power station will be built in the northern Indian state of Rajasthan alongside a coal mine to be developed by Peabody, The Energy Group's US coal division. The mine will start production in 1999 with the power plant, to be designed and run by Eastern Group, the electricity division, due to start generation in 2000. The Energy Group will own a 30 per cent stake in the project, with the rest going to the Hindusthan Development Corporation.
The group's attentions are about to shift back to the US, with the prospect of a deal in the next few weeks to buy power generation assets. "The US remains our key area for expansion," the spokeswoman said.