According to highly placed sources in the state government, the Gujarat government has indicated its desire to pick up equity in the project to the BSES-GAIL combine recently. Sources said the state government's entry into the project would provide it with a strategic advantage. A final decision on the equity route is expected to be taken shortly.

In fact, all matters relating to power projects have acquired urgency since the financial institutions have reportedly asked the Gujarat government, along with the MP, Andhra Pradesh and Maharashtra governments to identify power projects in their states which would be within their individual escrowable limits. So far, many projects in these states have been unable to achieve financial closure since the state governments have not been able to provide guarantee to them.

It may be mentioned that contrary to its stated policy of holding 51 per cent controlling equity in all joint ventures, BSES would have a 50 per cent equity in the project while GAIL would have another 35 per cent. It may be recalled that BSES had bagged two power projects aggregating about 160mw in Dahej and Khairalu in Gujarat through the competitive bidding route a couple of years ago. However, a change in government resulted in scrapping of these tenders through which small power projects were awarded. It is at this juncture that BSES stepped in and offered to set up a joint venture 500mw power project in the state along with the public-sector GAIL.

The Dahej power project is among the two major power projects which have been planned by the BSES-GAIL combine. The second one is a 500mw project which the combine is planning to set up in Delhi in collaboration with the Delhi Vidyut Board.

Reliable sources said Petronet LNG which is setting up a LNG terminal at Dahej is also contemplating picking up 5 per cent equity in the project.