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Orissa scurries to settle dispute with AES

Jatindra Dash in Bhubaneswar

Orissa is scurrying to settle a dispute with the AES Power Corporation after the US power major threatened to quit CESCO, one of the state's four private power distributors, over non-payment of dues.

Chief minister Naveen Patnaik and energy minister A U Singh Deo are discussing the matter with top state energy department officials, a senior energy official said.

The dispute came to light in the last week of May after AES Power Corporation closed down operations at a thermal power station in Banharpali in Jharsuguda district, 395 km from Bhubhaneswar.

AES, which has a 49 per cent stake in the plant, shut down operations for a week demanding the clearance of outstanding dues of Rs 14 billion from the state's Grid Corporation (Gridco), which has a 51 per cent stake in it. AES officials claim the plant was re-started after a week when Gridco assured clearance of dues.

The Orissa State Electricity Board is divided into two units -- Orissa Power Generation Corporation (OPGC) and Orissa Hydel Power Corporation (OHPC). The government has also formed four privately run distribution companies -- WESCO, NESCO, SOUTHCO and CESCO.

Gridco holds a 49 per cent stake in each company and is also the sole transmission entity. It purchases power from OPGC and OHPC and sells it to the distribution companies through bulk supply agreements.

Gridco has expressed reluctance in paying AES, claiming the company had been defaulting payments to CESCO which in turn owes Rs 2.5 billion to Gridco as electricity bill dues.

Besides, Gridco is also claiming Rs 270 million for losses due to closure of the Banharpali plant. AES representative Grayson Harvel was in fact threatened with a case by the state government for closing down the plant.

The dispute remained inconclusive even after a high-level delegation from AES, headed by its president and CEO Dennis Bakke, met Patnaik in mid-June. The AES delegation demanded a significant rise in tariff level and clearance of government dues.

No headway could, however, be made on the issue of multi-year tariff and a significant rise in tariff level. The state government asked the power company to submit a written proposal, the official said.

AES has now submitted a formal proposal to the state government to quit CESCO, the energy department official said. In a recent letter sent to the state government, AES said there should not be any limitation on the part of the state government to either takeover the distribution business or allow the US company to offer its shares in CESCO to a third party.

AES has also strongly objected to its executives being threatened with criminal cases by the state government, he said.

The Union energy ministry has, meanwhile, convened a meeting of the AES and Orissa government officials at New Delhi on July 30 to resolve the dispute, the official said.

Indo-Asian News Service

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