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Gridco sets terms for AES exit from Cesco

Dillip Satapathy

The Grid Corporation of Orissa has set terms for the exit of US power major AES Transpower from the Central Electricity Supply Company, power distribution company, before the end of the lock-in period.

The prominent among these conditions is repayment of Rs 4.60 billion dues owed by Cesco to Gridco towards power purchase.

While the state owned Gridco has 39 per cent stake in Cesco, AES 51 per cent and the employees the rest 10 per cent.

As per the shareholders' agreement, signed between Gridco and AES, the latter is not permitted to sell its shares in Cesco to any third party before March 2002. After this date and up to March 2004 AES can only sell its shares with the consent of Gridco.

This clause was built into the shareholders' agreement to keep non-serious bidders away during the divestment of in Cesco in 1998 by Gridco.

Meanwhile, the Gridco board has agreed to relax the lock-in period norm for transfer of AES shares in Cesco to a third party provided the American utility major fulfilled certain financial and contractual obligation -- the prominent of them being payment of outstanding dues to Gridco.

AES has to either clear the Rs 4.60 billion power purchase bills pending in favour of Gridco or obtain an undertaking from the prospective buyer of its shares on settlement of this outstanding dues before it is permitted to exit the company, a Gridco spokesman said.

"The minutes of the board meeting is being drafted. The details of the terms for exit of AES from Cesco will be known in a day or two," R B Mishra, finance director of Gridco, told Business Standard.

The willingness of Gridco board to allow AES to pull out of Cesco, albeit on fulfilment of conditions, before the end of the lock-in period is a major reversal of its earlier stand.

The Gridco board last month had outright rejected the AES offer for sale of shares worth $12 million at a reduced price. It follows the administrator's appointment for Cesco by the Orissa Electricity Regulatory Commission.

The appointment was made on the state government's request after the AES nominated managing director and other senior officials abandoned their responsibility by remaining absent from the headquarters for long periods.

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