AES corporation's Chhattisgarh power plant in trouble

Published: Sunday 15 October 2006

American power major aes Corporation's proposed us $1.2 billion power plant in Chhattisgarh has run into rough weather after the Orissa government refused to give it a no-objection certificate.

Under Foreign Investment Promotion Board (fipb) rules, foreign companies that have made investments in one Indian state require a no-objection certificate from that state before investing in another state. Orissa's energy minister, Surya Narayan Patro, cites two reasons for the refusal one, aes (currently managing the Orissa Power Generation Company) did not honour the shareholders' agreement signed with the state government to set up two more thermal power units; two, the company owes Rs 800 crore to the state-owned power trading company, Gridco.aes had taken up the management of Central Electricity Supply of Orissa (Cesco) in 1999, with a 51 per cent stake. But it gave up on Cesco three years later, citing massive losses and the state government's non-cooperation in recovering electricity bills. "How can we give (aes) 'no objection' to go ahead... when it has defaulted in our state?" Patro said in a letter to fipb. The 1,000-mw Chhattisgarh project has been touted as the largest fdi project in the country's energy sector since Enron abandoned the 2,184-mw Dabhol project.

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