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We may be following in their footsteps. We've publicly said that certain prospective acts (e.g., IFI foreclosure, a buy-out at less than full costs, etc.) would constitute expropriation but have not said publicly that expropriation has already occurred.
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Subject: Yahoo! Finance Story - Yahoo - AES in Dispute with State in India
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AES following in our footsteps.
Yahoo - AES in Dispute with State in India
Yahoo - AES in Dispute with State in India
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Related Quote ENE 19.79-0.86 delayed 20 mins - disclaimer Quote Data provided by Reuters
Tuesday October 23, 5:44 pm Eastern Time
AES in Dispute with State in India
U.S.-Based AES Corp. Complains About Getting Paid by Indian State
By RAJESH MAHAPATRA
Associated Press Writer
NEW DELHI, India (AP) -- AES Corp., a U.S. energy company, is seeking the Indian prime minister's help to settle a dispute over power production with a state government.
In a letter to Atal Bihari Vajpayee, AES president Dennis W. Bakke said his company's determination to continue in India was being tested by the government of the eastern Orissa state.
The letter, a copy of which was made available to The Associated Press on Tuesday, was dated Oct. 1 and appeared to have been faxed to the office of Prime Minister Atal Bihari Vajpayee.
AES and another major American power company, Enron Corp. (NYSE:ENE - news ), have made big investments in India after the government allowed foreign investment in the power sector in the early 1990s.
Houston-based Enron has had problems getting paid for power produced at the plant it helped build in India.
AES, based in Arlington, Va., operates two power plants in Orissa, holds 49 percent of the Orissa Power Generation Corp. and manages the main power distribution company in the state.
In his letter, Bakke told Vajpayee that AES has faced ``expropriation, repeated contract violations, intimidation ... and direct interference with day-to-day management'' by the state government and its agencies. The letter also complained about government-run agencies failing to pay 2.1 billion rupees ($44 million) in bills.
``If the situation faced by AES is not remedied urgently, it will undermine the trust and confidence of foreign investors in India,'' Bakke wrote. ``While AES still remains committed to India as a country it would very much like to serve, our determination to continue is being tested.''
AES has already offered to withdraw from the distribution company -- known as the Central Electricity Supply Company of Orissa. However, it has said that the company will continue with its interests in electricity generation.
The prime minister's office said it was not ready to comment on the report.
In Bhubaneshwar, an Orissa energy department official said when it was persuading AES to continue in the CESCO, the state government had given a verbal commitment that AES would be given an additional 2 percent stake, making the energy firm a major shareholder in the company.
However, the Orissa government had not been able to fulfill its commitment, the official said speaking on condition of anonymity.
If AES decides to pull out completely, it will be the third American company to do so.
Cogentrix Inc. quit a power project in southern India before it was started, while Enron is in the process of withdrawing from the Dabhol Power Project in western Maharashtra state, India's biggest ever foreign investment project.
On Sept. 14, Enron chairman Kenneth L. Lay wrote a letter to Vajpayee threatening legal action to pursue claims of up to $5 billion relating to the Dabhol Power Co. dispute and questioned India's ability to honor its contracts.
Lay had also warned that India may find it hard to attract foreign investors in the future because of the payment dispute with the Dabhol project, which stopped production and construction in May.
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AES site: http://www.aesc.com
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