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AES pullout leads to salary freeze for Cesco staff

Our Bureau

NEW DELHI, July 20

EMPLOYEES of the Central Electricity Supply Company (Cesco) of Orissa Ltd will not be receiving their salary for July onwards following AES Corporation's decision to deposit all the revenues from the power distribution business into the escrow account. A ES, which had begun operations in early 1999, employs 8500 people.

Addressing a press conference on Thursday, AES Corporation's worldwide chief, Mr Dennis Bekke, said, ``AES today decided to follow the state regulator's order and deposit all the revenues from the distribution zone into the escrow account.''

Earlier, the company had dipped into the escrow account to pay employee salaries which led to criminal proceedings being initiated against the Managing Director of Cesco.

Mr Bekke blamed the regulatory framework for the present crisis, stating that the regulator had set tariffs at levels which do not make it possible to recover costs.

AES has a 49 per cent stake in the generation company, Orissa Power Generation Company (OPGC), which sells power to the State-owned transmission company Gridco. The transmission company, in turn, sells power to the distribution company, Cesco.

In this arrangement, currently, the generator is owed around $45 million by Gridco, the transmitter. Gridco, in turn, is owed around $40 million by the distribution company, Cesco.

Gridco has asked AES to recover the generator's dues directly from the distribution company, where the latter has a majority stake.

On Wednesday, AES sought arbitration proceedings to recover the dues owed by Gridco to the generator.

Meanwhile, reacting to press reports on AES's interest in the Dabhol Power Company (DPC) project, Mr Bekke said, ``Dabhol is like any other potential business in which we might be interested. Reality is that our involvements in Dabhol is not very likely. '' He followed up with several reasons for this position -- ``First, the State and Enron need to resolve the issue and AES is not involved. Secondly, no proposal has been made by us to anyone. Thirdly, we have no plans to submit any such proposal. Fourth ly, we have not been asked by Enron to come into the deal. And, fifthly, we have our own problems and they need to be resolved before ...''

On the performance front, Cesco started off with a 54 per cent collection-to-billing ratio in April 1999. This rose to 71 per cent in September. The Orissa cyclones in November 1999 resulted in the ratio sagging at 54 per cent. It finally peaked to 105 p er cent in March, 2000. In April, it dipped to 62 per cent and steadily rose to 95 per cent in March 2001.

Cesco caters to a distribution zone with a high rural consumer base at 58 per cent, urban consumer base at 23 per cent; commercial 10 per cent; industry a mere 1 per cent; and irrigation 4 per cent. The transmission and distribution losses have dropped f rom 49 per cent in 1998-99 to 44 per cent in 2000-01.

Related links:
AES pulls out of power distribution in Orissa

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