Orissa cautious over dealing with AES Corporation

Dilip Bisoi

Bhubaneswar, May 22: IS the US utility giant, AES Corporation, is looking for an opportunity to withdraw from power business in Orissa? Many in the state government think so.

And on the growing suspicion that the US company is really preparing the grounds — or looking for an issue — for its exit, the state energy department has chosen not to initiate the process for the arrest of Mr Grayson Harvell, the Orissa Power Generation Corp (OPGC) managing director, under the Essential Services Maintenance Act (Esma) inspite of the permission of the law department to do so. The energy department is waiting for Chief Minister Naveen Patnaik to return from Delhi and take a final decision in this regard.

The US utility giant on Thursday shut down one of the 2x210mw units of OPGC at Ib Valley, demanding clearance of dues. Badly hit by the shutdown, Gridco pointed out that OPGC’s unilateral action violates the power purchase agreement (PPA). It also sought the arrest of Mr Harvell under Esma.

A senior government official told The Financial Express there are indications that AES Corp is keen on withdrawing from power business in Orissa. Its investment of Rs 603 crore in acquiring the 49 per cent stake in OPGC is giving a return -on -investment of only about six per cent. OPGC is likely to close its balance sheet for 2000-01 with only an operational profit as Gridco is not in a position to pay up dues of Rs 170 crore Meanwhile, the stand-off between the state government and AES Corp continues with the OPGC managing director refusing to obey the orders of the company board that the shut down unit be made operational.

The state energy department has also issued a circular on the same lines. Mr Harvell, in a letter faxed to the energy department on Tuesday, questioned the locus standi of the board and the energy department to issue such directives to him.

The government is contemplating initiating action against Mr Harvell under the provisions of Esma and company law. While the state law department has said Esma could be invoked against the managing director, the board of directors of OPGC has decided to take disciplinary action against the erring officials under the company law for disobeying the board’s directives.