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AES to quit Cesco, submits formal proposal to Orissa

US power major, AES, which threatened to pull out from the energy distribution business in Orissa, has submitted a formal proposal to the state government to quit Cesco, one of the four private power distribution companies in the state.

In a recent letter sent to the state government as a follow-up to the inconclusive discussion between the AES president, Dennis Bakke, and the Orissa government on July 20, the US company said in the present condition it was impossible for the company to run the business, official sources said.

While outlining the deep-rooted flaws in the regulatory policy and administrative environment in the state, the AES said that the state government was not focusing on any long-term solutions to the present problems.

Consequently it was speeding up the eventual collapse of the system, it said.

AES felt that there should not be any limitation on the part of the state government to either take over the distribution business or allow the US company to offer its shares in Cesco to a third party.

As part of the reforms in energy sector, distribution of power had been privatised in Orissa. While the AES, having the majority stake of 51 per cent in Cesco, distributes power in eight coastal districts, the Bombay-based BSES company runs the three other distribution companies -- Wesco, Nesco and Southco -- covering 22 districts.

The state-owned Grid Corporation of Orissa has 49 per cent stake in each of the distribution companies.

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