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AES set to exit power distribution in Orissa

Imran Khan in Bhubaneswar

American power giant AES Corporation-owned Cesco has decided to exit power distribution business in Orissa.

Sources in AES said that Cesco has already informed the Grid Corporation of Orissa Limited to stop power supply since the financial health of the company does not permit it to buy power on credit.

Cesco managing director Roberto Podesta, who is the AES representative, in his letter to Gridco has clearly stated that the company wants to exit power distribution business in Orissa.

"Given the uncertainty of its financial health, Cesco is not in a position to provide any assurance of payment to Gridco. Any credit extended by Gridco by continuing power supply is at Gridco's own risk," Podesta is learnt to have said.

AES owns 51 per cent stake in Cesco, while Gridco, a government of Orissa company, has 39 per cent and is solely in-charge of power transmission.

Sources told rediff.com that the letter sent by Podesta demonstrates AES's inflexible stand on wanting to abandon the distribution business.

Podesta said that ever since taking over the distribution business, Cesco has been unable to meet its financial obligations. This has happened despite the management and employees having achieved significant improvement in operations in a difficult regulatory and business environment.

Meanwhile, Gridco chairman Priyabrata Patnaik has threatened to file a defamation suit against Podesta unless he apologises for having accused Patnaik of acting under 'political considerations'.

Sources said that Podesta, in an earlier letter in response to Patnaik on payment of salary to Cesco employees, had said that Patnaik's 'constant flip-flop on this matter is obviously driven by political consideration rather than a business-like approach'.

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