US funds pressurize Bhel to exit Sudan

US funds pressurize Bhel to exit Sudan

New Delhi: State-owned Bharat Heavy Electricals Ltd (Bhel) is coming under pressure from US-based pension funds, potential investors in the power equipment manufacturing company, to exit its operations in Sudan, Africa.

The US has strained relations with Sudan, a country it accuses of state-sponsored terrorism and human rights violations.

Investments by state-owned companies are part of a larger Indian plan to secure energy resources in the oil-rich country. An exit could jeopardize this strategy.

Bhel has been involved in the construction of the Kosti thermal project for the National Electricity Corporation of Sudan, for which a $350 million (around Rs1,600 crore) line of credit has been given by the Indian government.

The largest power project in Sudan, this is expected to be commissioned sometime in 2010.

“We have been receiving communication from funds who may be potential investors in Bhel (about exiting Sudan). We have explained to them that we are not making any investments there. Moreover the electricity generated from the project will be beneficial for the people there," said a senior Bhel executive, who did not want to identified.

The funds seeking Bhel’s exit from Sudan include Colorado Public Employees’ Retirement Association (PERA) of Colorado, California Public Employees’ Retirement System (CalPERS), San Francisco City and County Employees’ Retirement System and State Teachers Retirement System of Ohio.

Questions emailed to Colorado PERA, CalPERS, San Francisco City and County Employees’ Retirement System and State Teachers Retirement System of Ohio remained unanswered till late Tuesday evening.

Bhel is the second Indian state-owned company after ONGC Videsh Ltd (OVL), the global arm of state-owned exploration giant Oil and Natural Gas Corp. Ltd, which is facing criticism for operating in Sudan.

Mint had reported on 29 June 2008 that OVL’s operations in Sudan had come under fire from international groups, such as Amnesty International, Genocide Intervention Network and Investors Against Genocide.

“We have been told repeatedly by these firms that human rights violations are happening in Sudan. We have told them that the power project is not even in the troubled area," said a second Bhel executive, who too did not want to identified.

The Sudan conflict, which started in 2003, is estimated to have resulted in the death of nearly 300,000 people and displaced at least two million more.

India wants a greater share in Sudan’s considerable oil and gas resources, and plans to leverage its infrastructure commitments to secure assets. India has been scouting for overseas hydrocarbon assets to feed a growing economy. Its search has taken it to some countries ravaged by civil war that are considered pariahs by the global community.

Sudan is scheduled to hold a referendum in January 2011, in which the southern part of the country may vote for separation; 85% of the hydrocarbon resources are in south Sudan, while the north has all of the infrastructure.

“The possibility of the situation getting out of hand is negligible. Nobody is ready for war," Angilina Jang Teny, Sudan’s state minister for energy and mining, had recently told Mint.

An analyst said the protest by the US firms follows a pattern.

“Given that these countries are energy rich, US companies have a natural interest to be present there. However, since human rights issues do not permit them, they don’t want to let anybody else steal a march over them," said Anish De, chief executive of Mercados EMI Asia, an energy consulting firm.