The government’s business is not to run businesses – for nearly three decades now this economic principle has held sway like a self-evident truth. Disinvestment and Privatization of state corporations have flowed from it unlocking value, bringing in investments and technical efficiencies. This is being reversed in Odisha in the case of Odisha Power Generation Corporation Ltd (OPGC) where the Naveen Patnaik government is buying the 49-pc stake held by AES Corporation for a consideration of Rs 1,000 crores. This at a time when the state’s finances are passing through a troubled phase and GST collections have consistently dropped.
OPGC is a joint venture company where 51 per cent stake is held by the state government and 49 per cent is held by US power major, AES Corporation. The move comes on the back of AES deciding to exit all coal-based assets that it held globally. The Odisha government has decided to make the purchase without any independent valuation and at the same terms that AES had offered to Adani Power. It is taking this decision by invoking its Right of First Refusal and making it a 100 per cent government owned company. Way back in 1999, OPGC had roped-in a strategic investor through global competitive bidding. It had offered 49 pc stake with management control to the private investor, that is how AES had come to this venture.
Stake sales in government companies was ushered in precisely because state socialism and government ownership had failed miserably. However, now this failed model is being applied in Odisha. Besides by taking over the management control of the state government is putting the entire project, including the recently raised 1,320 MW project built at a cost of Rs 10,746 crore with 75 per cent debt and 25 per cent equity, at risk. The generation projects of almost every state government is in bad shape. The Odisha government’s approach in the power sector in other projects has been problematic. It systematically delayed and created hurdles in the Talcher project expansion of NTPC, power from which was to feed other eastern states like West Bengal, Bihar, Jharkhand and Sikkim.
