Tata Power and Tata Motors, the two Tata companies that hold a 15.61 per cent stake in the beleaguered Haldia Petrochemicals, has initiated talks with the West Bengal government to exit from the project.

The group has invested Rs 180 crore (Rs 1.8 billion) as equity in the company and the stake is distributed equally between Tata Motors and Tata Power.

"The two sides are now in an advanced stage of negotiations. The Tata group is keen on selling its stake to the West Bengal government as they feel that they are the natural owners of the project. A final decision depends on the consent of the lenders," senior Tata group executives said.

The West Bengal government holds a 46.84 per cent stake in Haldia Petrochemicals while the balance 37.55 per cent stake is held by the Chatterjee group, an affiliate of the US-based Soros group.

The discussions between the two sides comes at a time when the corporate debt restructuring cell comprising of senior executives of banks and financial institutions is considering a debt recast of the petrochemicals company. The total liabilities of the company stands at around Rs 4,700 crore (Rs 47 billion).

Haldia Petrochemicals has set up one of India's largest integrated petrochemical complex at Haldia in Midnapore district of West Bengal.

If the deal goes through the wheel would have come a full circle. The project was conceived by the West Bengal government in 1977 but did not take off for sometime.

The government then invited private sector participation and the RPG group was considered the front-runner in partnering the state government in developing this project. However, the Tata group emerged at the last moment as the partner of the government with the late group scion Darbari Seth playing a pivotal role in clinching the deal.