After months of talks, state-owned oil major Indian Oil Corp. Ltd plans a joint venture with the Chhattisgarh Renewable Energy Development Authority to raise jatropha crop and procure seeds to produce biodiesel in the state.

The agreement is expected to be signed on 19 November between Sarthak Behuria, chairman of Indian Oil, and Shailendra Kumar Shukla, head of the Raipur-based authority.

An Indian Oil spokesman confirmed the deal. Under the agreement, the two companies will set up a new joint venture firm which will, in turn, invest Rs500 crore to kick-start the programme, said Shukla. Indian Oil will have a 74% stake in the new company and the remaining 26% will be with the authority.

The name of the new company will be registered following the deal. The money will be invested in raising nurseries (of the plant), seed collection and setting up a biodiesel plant, he said.

With escalating oil prices, bio-diesel derived from jatropha seeds is seen as a viable alternative to reduce the higher costs of import by many states, including Madhya Pradesh and Rajasthan.

Jatropha is a perennial shrub that sporadically grows in rural areas, even wasteland, and is now being promoted as a commercial crop in the Bharatiya Janata Party-ruled state.

The much-hyped jatropha initiative took off in the state in 2005, with promises of converting all government vehicles to biodiesel by 2007. Already, though, these targets have been missed.

The Chhattisgarh renewable energy authority says that some 160 million saplings have been planted in wastelands across the state in the past year, covering about 1.8 million hectares.

The entire state will be divided into three zones and public sector oil companies will be allowed to gather seeds from plants that grow on government land, said Shukla.

Shukla said oil refining and marketing company Hindustan Petroleum Corp. Ltd has agreed in principle to enter into a similar tie-up and has already submitted a draft ­proposal.