According to a cross-section of senior executives of corporate companies which are operating power projects in Gujarat, who spoke on condition of anonymity, since PowerGen would become a majority stake-holder in GTEC after picking up the 40 per cent equity which Torrent is offloading which would take up its equity holding to 67.8 per cent, the power purchase agreement (PPA) between the state electricity board and GTEC should be reviewed.

This is in view of the fact that the PPA had been signed at a time when a domestic player, namely Torrent had been in the driver's seat.

"Even at that time,the PPA which had been signed between the government and the GTEC had been strongly biased in favour of Torrent since it ensures an astronomical 36 per cent return on equity (RoE) compared to the 22 per cent RoE which the other players in the field are getting," corporate sources said.

It may be mentioned that apart from GTEC, domestic goliaths including Reliance, Essar and the state government-owned PSUs namely the Gujarat Power Corporation (GPC) as well as the Gujarat Industrial Power Company Ltd (GIPCL) are running power projects in the state.

Given the scenario, the PPA signed with Torrent is being considered as "blatantly discriminatory" against the other players. "The government has placed even its own PSUs such as GIPCL at an unfair disadvantage compared to GTEC," lamented a corporate insider.

In fact, according to the grapevine in the corporate world, one of the major reasons being attributed to the acquisition of GTEC by British multinational PowerGen is the extremely lucrative PPA. The clamourfor a review of the PPA is thus gaining ground here in the wake of the the imminent change of guard at GTEC from a domestic company to a MNC.

This is more so in view of the mounting losses some of the players in the power sector are being burdened with on account of poor recoveries from the state electricity board. In fact, the unattractive PPA between Essar Power in Hazira and the SEB is being considered as one of the main stumbling blocks in the way of Essar which is keen to dispose off the company.

Several domestic and international players including Enron have been eyeing the Essar Hazira plant but nothing has been finalised thus far.