ADB had committed to provide assistance to the state for its various developmental activities, primarily in infrastructure sector. A large sum has been identified for the power sector.

However, the Bank has put certain conditions for disbursement to this long-term loan. For the power sector, these conditions include passing a legislation. The legislation should clearly define the role of the state government and the state electricity regulatory commission.

While Gujarat has already set up the regulatory commission with wide range of powers, the legislation is required to endorse it. "Formation of the regulatory commission has been welcomed but there is a fear that in the absence of legislation, future governments may scrap the present arrangement," said sources.

Besides, the Bank had asked the state to make provisionfor metering the agriculture consumption and privatisation of transmission system.Government officials said that the state was likely to pass the proposed legislation in a month. "We are in touch with the Bank officials," they said adding that recently in a meeting with the ADB representatives they have been updated on the progress made on the issues so far.

The state is installing the meters to measure agriculture consumption, officials said, adding that this however, would take some time. The work is to be taken up in phases.

For the power transmission, the state has already set up a separate transmission company. This, however, is a wholly-owned arm of the the government. The state may invite partners at a later date. "Legislation to unbundle the power sector in generation, transmission and distribution is underway," officials said.

Gujarat has already established a lead over other states like Maharashtra in formulating policies, for private sector participation in various infrastructureprojects.

The state set up the electricity regulatory commission much before Maharashtra though it began the process quite late. The commission has been empowered with wide range of functions.

In power sector Gujarat Electricity Board (GEB) started drawing power from the 655-mw independent power plant then set up by a joint venture of the Ahemadabad-based Torrent group, GIDC, PowerGen of UK and Siemens of Germany. (Torrent has sold the equity to PowerGen).

However, the state still has a number of projects which are proposed to be set up by private companies. It has envisaged around Rs 55,167 crore investment in power sector to enhance the generation capacity to 17,477 mw by year 2010 from 9000 mw at present. Of this, it expects around Rs 28,000 crore would come from private sector.