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Orissa not to allow AES to walk out of CESCO

Jatindra Dash

The continuing feud between the government of Orissa and the US power major AES Transpower over the running of the electricity distribution company Central Electricity Distribution Company Ltd has further escalated with the board of directors of the state-run Grid Corporation of Orissa, on Friday, rejecting the AES offer to offload its 51 per cent stake in the CESCO.

An emergency meeting of directors of the state-run Gridco not only declined AES' offer to sell its equity in CESCO but also decided not to permit sale or transfer of AES shares to a third party, an official said on condition of anonymity.

The AES had written a letter to GRIDCO last week expressing its desire to pull out of CESCO by transferring its share in favour of GRIDCO or any third party. GRIDCO's chairman-cum-managing director, Priyabrata Patnaik, said they rejected AES' offer as it went against the shareholder's agreement. AES, a major shareholder of the distribution company owes Rs 1.60 billion to the government in electricity bill dues.

Besides, the power company owes Rs 270 million to Gridco on account of losses caused to the latter due to the closure of the Banharpali plant by AES, the source said.

The electricity board of Orissa, which was among the first states to undertake reforms, 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 tussle between the state government and AES remained unresolved even after Union energy secretary A K Basu convened a meeting on Tuesday in New Delhi that was attended by World Bank officials apart from the representatives of the warring sides.

The dispute between the two surfaced 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 that dues of Rs.14 billion from Gridco be cleared first.

But Gridco said it could pay AES only after it recovered Rs.1.60 billion as electricity bill dues from CESCO. It has also asked AES to pay Rs.270 million as compensation for losses due to the closure of the Banharpali plant.

Gridco holds 51 per cent stake in the plant and 49 per cent 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.

The AES Corporation has committed a breach of contract by not giving financial support to CESCO in its revival, he said.

The US power-company is not allowed to sell its stake to a third party till March next year without the permission of Gridco.

But the state government was not taking any chances and had sought legal opinion in case AES tries to do that, the official told IANS.

Indo-Asian News Service

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