Mantralaya sources told The Financial Express that the rate of interest has been fixed at 14.5 per cent with .20 per cent commission. The departments concerned have been asked to appoint the lead manager and coordinators.

However, in case of MSEB, JM Financial will continue to work as lead manager as it has already raised more than Rs 800 crore early this year for the MSEB for picking up 30 per cent equity in the Dabhol power project. The state irrigation department will decide soon whether to allow the SBI Capital Markets as lead manager and JM Financials, Kotak Mahindra and DSP Merrill Lynch as coordinators for the Rs 1,000 crore issue. Recently, they have raised in May this year Rs 500 crore (Rs 302 crore for the Maharashtra Krishna Valley Development Corporation (MKVDC) and Rs 198 crore for Vidarbha irrigation corporation, Godavari irrigation corporation, Tapi irrigation corporation and Konkan irrigation corporation).

The state irrigation minister Eknath Khadase said that of the Rs 1,000 crore, Rs 500 crore have been earmarked for the MKVDC department and the balance for the other irrigation corporations. "Depending upon the need of MKVDC, the fund to be raised may be diverted to it from other irrigation corporations," he added.

MKVDC will have to make a payment of whopping Rs 750 crore to the contractors who had recently gheraoed the engineers to press their demands. Similarly, it will have to incur expenses on the ongoing irrigation projects in the Krishna valley as the state will have to harness 543 thousand million cubic of water by 2000. The market sources have expressed serious doubts over raising Rs 1,000 crore especially in the volatile market and when the cash reserve ratio has been increased by one per cent to 11 per cent to arrest the rupee slide by the RBI. They have also expressed apprehensions if various departments appoint separate lead managers and coordinators as it will prove to be a "counter productive exercise."