The Rs 300-crore plan was conceived more than a year ago with NTPC slated to pick up 26 per cent and ONGC 24 per cent. However, after IOC and ONGC decided to work together in key petro-related activities in the upstream and downstream sector, the Surat power project was naturally open to a third partner.

This would have resulted in ONGC divesting part of its 24 per cent stake to IOC but the idea has apparently not found favour with the NTPC top brass though this could not be officially confirmed.

``As things stand, there is virtually no chance of IOC participating in the project which will be promoted by ONGC and NTPC as planned earlier,'' top sources said.

ONGC is, however, still being considered as a shareholder for the 500 mw Sawli project being promoted by IOC and Mitsubishi ofJapan. Larsen & Toubro is also in the running for a stake and a final decision on the equity pattern is expected to be taken during the next few months. Till date, the ONGC board has not made up its mind and has only given in-principle approval to pick up 20 per cent in the 301 mw Panipat project being set up by IOC and Marubeni of Japan.

At one point, IOC and ONGC were contemplating combining the Surat and Sawli projects into one where there would be a three way PSU participation comprising ONGC, NTPC and IOC with a total 50 per cent stake.

``The two oil companies have now decided that it makes more sense to promote both projects as there is tremendous demand potential in Gujarat. Apart from this, the fact that NTPC will be the lead promoter in one gives ample scope for IOC to consider another project on its own comfortably,'' sources said.What has emerged clearly is that power has been identified as top priority by both IOC and ONGC. The companies had indicated their interest to enter this area when theprevious budget announced a five year tax holiday for power projects commissioned between October 1, 1998 and September 30, 2003. It was around this time that ONGC entered into a memorandum of understanding with NTPC for the Surat project and some time later decided to join hands with IOC for selective projects both here and abroad.