The joint venture was signed in the presence of Railways Minister Lalu Prasad and Power Minister Sushil Kumar Shinde at Rail Bhawan.
"This is historic day for us as we are trying to be self reliant thereby saving huge cost that are incurred on purchasing power," said Prasad on the occasion.
"We want uninterrupted power supply for smooth running of railways in the country. We should match up with every country in terms of infrastructure in the globalisation era," said Prasad.
The Railway Minister assured that the company would provide 10 per cent of the power generated from it to the state.
Named as Bharatiya Rail Bijlee Company Ltd, the power plant is estimated to cost Rs 1,605 crore (Rs 16.05 billion). The NTPC will have an equity of Rs 1188 crore (74 per cent) and the railways will contribute the balance Rs 417 crore (26 per cent) in the project.
The average cost of generation from this plant will be Rs 2.13 per unit. After paying wheeling and transmission charges Railways would save between Rs 400 to 600 crore every year.
