"The use of rupee-rouble account for Iisco revival was discussed during Russian prime minister yevgeny primakov's visit to India early last week and we are expecting a favourable reply from them soon," union steel minister, Naveen Patnaik said.

The proposal, a follow up of the protocol signed at the fifth Indo-Russia inter-governmental commission in Moscow last month, has already been cleared by the finance, commerce and external affairs ministries, Patnaik said.

The protocol, signed between finance minister Yashwant Sinha and Russian first deputy premier Yuri Maslyukov, had recommended use of rupee-rouble account to fund TPE's equity in Iisco and for credit to buy equipment for modernisation.

Patnaik said India has even offered 51 per cent stake to the Russian company in Iisco asan option, though the original proposal was only for a minority stake for TPE.

Iisco revival has been pending for quite some time, as TPE, one of the bidders in the global tender, had sought to use $ 400 million from the Escrow account to invest in Iisco.

Normally rupee-rouble account is used only for trade in commodities.The TPE-Sail joint venture would take up modernisation drive in Iisco worth about Rs 2,107 crore, Patnaik said.

According to the original proposal, Sail was to hold 51 per cent equity in the joint venture and TPE around 40-42 per cent. The remaining equity was to be picked up by the West Bengal government.

Patnaik said the ministry would report the latest developments to the Board for Industrial and Finacial Reconstruction (BIFR), whose deadline for reviving Iisco ends on December 31, 1998.

TPE proposal has already been approved by the Sail board.

Meanwhile, the ministry is also considering Industrial Development Bank of India (IDBI) report on Sail restructuring, regardingrevival of Iisco through conversion of Steel Development Fund (SDF) loans into equity and other means.

TPE came into the picture when it, along with Mitsui, were the only bidders in the global tender floated by Sail in August, 1996.