Detergent-major Nirma Ltd is entering into power generation through a proposed Rs 1,000 crore (Rs 10 billion), 250 mw joint venture project in Ghogha, Bhavnagar district.

The Government of Gujarat enterprise, Gujarat Power Corporation Ltd, will be partnering Nirma in the project.

"The project will be operational within two years from the foundation stone laying ceremony, which is expected to be conducted any time after the general elections.

"The Gujarat Electricity Board has agreed to buy the entire generation from this plant as it is facing power shortage in the Saurashtra region. The plant capacity can be raised to 500 mw later. Land for the project and clearances have been obtained by GPCL," said Saurabh Dalal, minister of state for energy and petrochemicals.

Dalal said the state government will soon take a decision about the amount of equity GPCL is going to hold in the new entity.

"We are working on it and we hope that GPCL will hold equity that will give it an opportunity to have its representation on the board of the new company."

Dalal said the state is also looking towards more such joint ventures with private players.

"The state will not make further investments in setting up new power projects. The new Electricity Act gives enough opportunities to the private sector. We are ready to encourage more companies like Nirma in this regard," he said.

Of late, the power-deficit state has been witnessing some interest in its power sector. Recently, the National Thermal Power Corporation signed a memorandum of understanding with GPCL and GEB for setting up a 2,000 mw plant at Pipavav in Amreili district. NTPC has also sought government's approval for entering into power distribution business.

Once commissioned, Nirma will operate this plant using lignite as a fuel, which according to industry experts, will come cheaper than regassified liquefied natural gas.

"The cost of lignite will not be more than Rs 2.25 per unit and Gujarat has enough stock of lignite in its mines. The state will welcome private companies wanting to set up lignite-based projects.

And, more importantly, it is not necessary that these companies will have to sell the power that they produce in Gujarat only. They will be given the freedom to sell outside the state too, if it makes better business sense," said a source in state energy department.