The 50:50 JV company will begin work from 2 April 2013 to accelerate the process of supplying electricity from power generating stations.
The new firm will also strengthen the transmission system in the Indian state and it would be run on a built, operate, own and maintain scheme at an estimated cost of INR63bn ($1.15bn), reported Bihar Times.
PowerGrid executive director Arun Kumar and Bihar State Power Transmission managing director T T Jha signed the MoU.
Power Minister Bijendra Prasad Yadav noted that Bihar would get 4,500MW of power by June 2015, and the problem of transmission will now be taken care of by Bihar Grid Company.
Yadav added that the state would receive nearly 8,000 MW of power, including the central sector allocation, by the end of 2016-17.
In addition, Yadav said the government is working on all three fronts – power generation, transmission and distribution.
PowerGrid chairman-cum-MD R N Nayak remarked that about 6,000MW of power would be available in the state from various sources by the end of the 12th Five-Year plan.
