Under the agreement, Tarong has been granted an option to buy 5.7 million tonnes of coal annually from the New Acland mine in Queensland for 25 years, starting in 2011 and concluding in 2035.

If the parties proceed with the agreement, Tarong will use the coal to fuel its two power stations in the Kingaroy/Nanango region of Queensland.

The agreement contains restrictions which limit the quantity of coal that New Acland can sell each year to parties other than Tarong and limit Tarong's ability to onsell coal to third parties.

In authorising the agreement, the ACCC said the public detriments arising from the restrictions would be limited.

“The restrictions within the agreement contribute to the security and efficiency of long-term supply sought by Tarong and on the information available appear to be in the public interest,” ACCC chairman Graeme Samuel said today.

The restrictions are intended to ensure that there will be sufficient coal available to Tarong for the life of the agreement.

If Tarong does not take its allocated annual quantity of coal, then New Acland may increase the quantity of coal it sells to third parties.

Surplus coal acquired by Tarong also has the potential to be made available to other parties.