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July 31, 2001
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Money > Business Headlines > Report July 31, 2001 |
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AES Corp to quit Cesco, but not IndiaLola Nayar in New Delhi US power major AES Corporation has conveyed to the central government its decision to quit power distribution in Orissa following a tussle over unpaid dues and tariff. During a meeting with power secretary in New Delhi on Monday, the company officials made it clear that AES has no plans to quit the state or India, but that it would like to offload its stake in Orissa's power distribution unit, Central Electricity Supply Company. "We do not want to continue in Orissa power distribution in the present relationship and have offered to sell our stake in Cesco to the government or to a third party," Edward Grayson Harvel, managing director of Orissa Power Generation Corporation, said. AES Corporation's investment in India currently includes $10 million in Cesco and Rs 6.03 billion for its 49 per cent stake in OPGC. But crisis or not, AES has no intention of quitting the Indian power sector. AES has in fact made known its keenness to "increase our stake in OPGC to 52 per cent or more," said Harvel. "We just intend to get out of Cesco. The problem with all the distribution companies is the same - the tariff is not sufficient to meet the electricity cost," said Harvel. "Further, there is the law and order problem and lack of government support to cut off power supply to non-paying customers." The Orissa State Electricity Board was among the first to start reforms including privatisation of distribution and transmission, which has considerably reduced power thefts and losses. The state electricity board is divided into two units -- Orissa Power Generation Corporation and Orissa Hydel Power Corporation. The government has also formed four privately run distribution companies -- Wesco, Nesco, Southco and Cesco. The dispute came to light in May after AES closed down operations at a thermal power station in Banharpali in Jharsuguda district, 395 km from Bhubaneshwar, for a week demanding the clearance of outstanding dues of Rs.14 billion from the state's Grid Corporation. At the same time, Gridco has expressed reluctance in paying AES, claiming Cesco owes Rs 1.60 billion as electricity bill dues. Besides, Gridco is also claiming Rs 270 million for losses due to closure of the Banharpali plant. Gridco holds 51 per cent stake in the plant and 49 percent stake in each distribution company. As the sole transmission entity, Gridco purchases power from OPGC and OHPC and sells it to the distribution companies through bulk supply agreements. "Despite the failure of the Orissa government to honor its commitment," Harvel said the US company is keen to enhance its stake in the Indian power sector, including distribution, provided the conditions and tariff are more conducive. "We are not contemplating leaving Orissa or India. With our history in Orissa, we are weighing all factors while looking at other investment options," said Harvell. "If the state government is able to make conditions right and operation viable we would be interested in taking up distribution activity in other states." Indo-Asian News Service YOU MAY ALSO WANT TO READ:
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