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AES's Indian subsidiary faces workers' ire

Some 20 angry workers on Monday chased a senior manager out of his office at Cesco, the troubled Indian electricity distribution subsidiary of US power firm AES Corp, Cesco said.

The incident, which took place in Orissa, is the latest in a series of confrontations between Cesco and its 8,500 employees who have not been paid wages for the month of July.

The official, Cesco's managing director Roberto Podesta, escaped unhurt, Venu Nambiar, Cesco's director told a news conference in New Delhi.

Cesco said it had paid salaries until June and its wage bill was Rs 55 million.

Earlier Cesco, which is 51 per cent-owned by AES, had said it was unable to pay workers or for the power that it purchased from the state-owned transmission firm. It said the tariffs set by the state's regulator were too low and it could not recover even its costs.

The regulator has not allowed Cesco to raise tariffs.

"We want out. The realisation is there that the board has lost total control," said Nambiar.

"The employees want AES management to go and Gridco to take back the distribution business."

Gridco is the transmission firm run by the Orissa state which is owed money by Cesco, which also owns a 49 percent stake in power producer Orissa Power Generation Company.

OPGC sells power to Gridco, but says it has not been paid for it.

Loss-making power industry

AES has invested some $175 million in the past decade in Orissa's power network -- a move which was hailed as the beginning of serious reform in India's loss-making power industry.

Nambiar said the state government had failed to provide Cesco with a better regulatory environment and adequate protection to its senior management, forcing the company to rethink its strategy.

He said Cesco had considered offloading its equity stake in favour of employees although it had not worked the legal and financial means to do this.

"Even without money, we want out," Nambiar said. "The regulatory structure and the low tariffs do not allow even costs to be recovered."

India is trying to reform its loss-making state electricity boards by hiving off their generation, transmission and distribution arms into separate firms and selling a part of their equity to domestic or foreign companies.

But the country's power sector reforms have been mired in a host of legal and operational issues. This has led to a clutch of foreign power companies pulling out of India or making known their intentions to do so.

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