The announcement was foreshadowed by Eden last week, in response to a share price query by the Australian Stock Exchange regarding a 73% jump in its market capitalisation.

Once it was apparent the news had been leaked, the company went into a trading halt.

The last time India was mentioned in an Eden market release was last month when executive chairman Greg Solomon told shareholders the company was negotiating the deal.

In a statement today, the Perth-based company said it has already sent two test engines to the United States for conversion to hydrogen-natural gas, and expects they will be ready for return to India by the end of next month. The engines will then be tested and used in various demonstrations projects in India.

“At present there are four demonstrations planned for 2007 in major cities where natural gas is presently available – Delhi, Mumbai, Ahmedabad and Kanpur,” Solomon said.

“Eden is confident that completion of these demonstration projects will lead to a progressive rollout of Hythane buses in India.”

The deal, which will run until 2016, was signed with transnational bus manufacturer Hinduja Group’s subsidiary Ashok Leyland.

Over the next five years, the Indian Government plans to expand its natural gas pipeline network to make the energy source available to a “large percentage” of vehicles in metro cities and towns, according to Eden.

“It is anticipated that the number of natural gas buses will increase dramatically during the next five years and [Eden’s wholly owned subsidiary] Brehon aims to have a large percentage of these buses operating on Hythane,” Solomon said.

“At present, natural gas sells at about 60% of the cost of diesel and this provides a great incentive for bus fleet operators to use natural gas as a vehicle fuel wherever it is available.”