One proposal under review involves the HSEB catering to the function of billing alone while the sale proceeds from power can accrue directly to the IOC-Marubeni joint venture. A fee, in the form of a commission, would be paid to HSEB for this task, sources said. The other option, of course, would be for the joint venture to claim a first charge on any escrow account provided by the State.

"Talks have been on for a while now and a decision is expected to be taken during the next few months," sources added. There is every indication of a positive outcome emerging as the HSEB is believed to be keen on giving a fillip to the power projects in the state.

ONGC is tipped to take a 20 per cent stake in the project andthis proposal has been okayed by its board of directors. However, the reports indicate that ONGC could have second thoughts on participating if there are glitches like timely payment for power sold or problems relating to fuel linkages.

Sources said a fresh feasibility study would be conducted which would determine ONGC's participation in the power plan.

The balance equity is expected to be offered to other strategic and financial investors. The process will be wrapped up quickly once the issue of proceeds from sale of power is sorted out. If that does not happen, experts say there could be further delays in commissioning the project though this could not be officially confirmed from IOC officials.

IOC and ONGC have decided to participate in a series of petro-related activities both here and abroad. The boards of the two companies have recently given the go-ahead to consider a strategic alliance in seven projects, two refineries in Paradip, Orissa and Nagapattinam, Tamil Nadu, three power projects inPanipat, Hazira and Sawli and two petrochemical ventures in Panipat and Hazira.

ONGC is very positive about being part of the power business in Gujarat. It had planned a 300 mw project along with NTPC in Surat and has also been offered a stake in the 500 mw IOC-promoted power plant in Sawli. The current thinking is that it makes more sense to combine both these plans into a single one and envisage an equity arrangement that would involve IOC, NTPC and BPCL holding 50 per cent of the equity while offering the balance to L&T and Mitsubishi Corporation of Japan.

IOC and ONGC have similarly finalised plans to set up two holding companies, one to oversee joint operations in India and the other in regions overseas. The white paper outlining details of the proposal has been drafted by a task force and submitted to the government.

The holding companies will oversee vital petro-related activities to be carried out in India and other countries. These will include refining & marketing, exploration & production,petrochemicals, power as also research and other consultancy services. It is but obvious that IOC's interests would lie in exploration & production while ONGC will concentrate on the three key downstream areas.

What is of particular interest in the IOC, ONGC alliance is the understanding reached on the pattern of equity investment in joint projects both here and abroad. It has been decided that the lead company for the project, be it IOC or ONGC, will hold at least 26 per cent while offering up to 24 per cent to the other. To elaborate, if IOC decides to get into a petrochemicals venture, it will take 26 per cent while offering ONGC up to 24 per cent. Similarly, where ONGC finalises an exploration venture, it will pick up 26 per cent while IOC will be allowed a maximum 24 per cent.

Deal with Lubrizol by July-end

The Government would finalise the deal to sell its entire 60 per cent stake in joint sector Lubrizol India to IOC by July-end this year. IOC and petroleum ministry officials arenegotiating with various merchant bankers to finalise the price at which government would sell its stake to the state-owned company, petroleum ministry sources said.

Merchant bankers working out details of the pricing said it was likely to be finalised within two weeks and a decision to conclude the deal would be taken in the next two months, sources said.

According to the agreed deal, the government would part away with its equity in favour of IOC, which in turn would dilute its stake by 10 per cent to Lubrizol India. The decision to sell off government equity to IOC was taken to accomodate the demand of Lubrizol for an equal stake in the Indian venture.