The US company AES has appealed to the Indian prime minister to help settle a dispute over power production in Orissa, one of the Indian states.

AES operates two power plants in Orissa, owns 49 per cent of the Orissa Power Generation Corp and manages the main distribution company in the state. However it has encountered a series of management and payment problems. In a letter to the prime minister, released to the press, AES claims that it has faced expropriation, repeated contract violations, intimidation and interference with its day to day management by the state government and its agencies. It is also owed $44 million by state-run agencies.

AES has offered to withdraw from distribution company, the Central Electricity Supply Company of Orissa (CESCO), but intends to continue with its power generation interests. However the company has said that if the situation is not remedied it will undermine the confidence of foreign investors in India.

AES is not the only US company to run into trouble in India. Cogentrix Inc abandoned a project in southern India before it was started and Enron is on the verge of pulling out of the Dabhol Power Co in Maharashtra where it is pursuing a claim for up to $5 billion.