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Orissa govt allows AES to sell stake

Imran Khan in Bhubaneswar

The Orissa government has decided to allow the American power giant AES to sell its majority stake in the private distribution company, Central Electricity Supply Company, to any third party conditionally, official sources said on Saturday.

Sources said Orissa government owned Grid Corporation of Orissa Limited has also decided to allow AES to sell its stake.

GRIDCO board of directors, which met recently to discuss AES's proposal to quit the distribution business, resolved that such relaxation is subject to fulfilment of financial and contractual obligations.

AES had offered GRIDCO, last month, to sell its shares worth $12 million at a reduced price, but the GRIDCO board had rejected the offer.

Sources in the state energy department, however, said that as per the shareholders agreement between GRIDCO and AES, the later cannot offload its share to any third party, without the approval of GRIDCO during the lock-in period ending March 31, 2002.

AES owns 51 per cent stake in CESCO, while GRIDCO, an Orissa government company, has 39 per cent, and is solely in-charge of power transmission.

The employees of the utility own the remaining 10 per cent shares.

Though, AES is yet to officially abandon the distribution business in Orissa, and still enjoys the status of a major shareholder, CESCO is managed by a senior Indian Administrative Service officer appointed by the state government.

The IAS officer was appointed last month on the directive of the Orissa Electricity Regulatory Commission, following the withdrawal of AES from the day-to-day management of the distribution company.

It may be recalled that the American power giant had decided to exit power distribution business in Orissa.

Earlier, CESCO had informed the Grid Corporation of Orissa Limited to stop power supply since the financial health of the company did not permit it to buy power on credit.

CESCO managing director Roberto Podesta, who is the AES representative, in his letter to GRIDCO had stated since taking over the distribution business, CESCO has been unable to meet its financial obligations.

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