According to a top official, both these companies have initiated talks with KPCL to form a joint venture entity in which Karnataka Power Corporation would hold 26 per cent stake. The remaining 49 per cent equity holding has been earmarked for others.

While the joint venture partner would have to bring in Rs 134.66 crore as equity, that of KPCL would be around Rs 140.05 crore. The cost for the first phase of the project with a total capacity of 2X500 mw is expected to be around Rs 1,795.52 crore.

The company was also planning to raise Rs 250 crore through a bond issue shortly, while banks and financial institutions would assist for Rs 1,006.86 crore. "Leading financial institutions like ICICI, IDBI, IFCI have elicited interest inthe project," he added.

The official said both L&T and BHEL were in the process of submitting their formal applications. However, many foreign power companies have not shown interest to form the joint venture. "The state-run company has not yet closed international bidding and at least 15 additional applications are awaited during the next few weeks," the official said.

The initial work for the first phase is scheduled to begin by June 1999 and the time required for completion is 36 months from the date of financial closure. Going by this calculations, the project is likely to go on stream by June 2002.

Since the Vijayanagar power plant is likely to generate about 6,200mt of ash per day, KPCL was planning to offer the ash to other companies for manufacturing purposes. "We are in talks with many local firms which make products like bricks, cement, AC sheets, road construction material, agriculture manure," he said.

According to the official, KPCL has also decided to set up its second 400kv transmissionline from Vijayanagar Thermal Power Station to Davengere. "The first such line from Raichur Thermal Power Station to Davengere is under construction by the Karnataka Electricity Board. The line passes through Kudithi, a location adjacent to VTPS," he added.

Requirement of water is about one tmc per annum for an ultimate capacity of 2X500 mw. Having earmarked Rs 74 crore for water supply, KPCL proposes to draw water from Tungabhadra reservoir. The company is also planning to install a six metre high gate over Singatalur barrage for storing an additional two tmc of water.