Search the Internet          Tips  Sites: Finance, Investment

AES undeterred by Orissa government's threat of legal action

M I Khan in Bhubaneswar

US energy giant AES Transpower is not ready to bow before the Orissa government's pressure to restart the second unit of the Orissa Power Generation Corporation Ib thermal power plant, which was shut down by AES representative Grayson Harvell , who is also the managing director of OPGC.

Days have elapsed since Harvell, on Saturday, shutdown the power plant. But AES is determined not to make any compromise with its stand.

Harvell has not only rejected the OPGC board of director's ultimatum to resume operations in the Ib thermal power station, he has counterered the order, and has challenged the board's right to issue such a directive.

Earlier the GRIDCO (Grid Corporation of Orissa Limited) chairman and managing director Priyabrat Patnaik had asked the state government to arrest Harvell under the Essential Services Maintenance Act for 'arbitrarily' shutting down the power plant.

Sources in AES told rediff.com that invocation of ESMA has far reaching implications not only for Orissa but for India too." Action against Harvell may send wrong signal to foreign investors" sources said.

AES remains unfazed. "The deadlock continues on Wednesday as AES has not shown any sign to resume the generation of electricity from the power plant and supply to GRIDCO" said the GRIDCO CMD Priyabrata Patnaik.

Harvell has justified his action to shut down the OPGC power by citing the non payment of electricity bills by GRIDCO, the bulk supplier of power to four private distribution companies in the state including the one owned by AES.

Sources in the AES' office at the power plant in Jharsuguda district of Orissa said that AES is not going to start operation in the power plant unless GRIDCO pays its electricity bills to OPGC."

AES has not accepted the decision of the state government nominees in the OPGC Board, which directed to restart the power plant," sources pointed out.

AES holds a 49 per cent stake in OPGC, the remaining 52 per cent is with the Orissa government. While AES retains the post of the managing director, the chairman's post is with the government.

AES' tough stand over the issue can be gauged from the fact that Harvell in his reply on Tuesday to the state government, said that the circular resolution violates the shareholders agreement, which vests the day to day management of the company with the managing director.

"It is in direct violation of the shareholders' agreement between the AES and the government of Orissa" Harvell said. The resolution, however, may not be passed unless at least one nominee each of AES and the state government votes for it under the agreement.

It may be recalled that Harvel had written a letter to GRIDCO on May 17 asking it to pay the pending due of Rs.1.7 billion to AES and had warned of reducing power supply in case it failed to comply.

GRIDCO CMD has charged that as a result of AES' arbitrary decision, the corporation is, daily, incurring a loss of Rs 8.5 million.

However, Patnaik told rediff.com that we hope things to move in the positive direction, this evening, once chief minister Naveen Patnaik arrives from New Delhi.

"The CM would take a decision to resolve the issue" he said.

Money

Business News

Tell us what you think of this report