19 Pages


Power trip or power play: the case of AES-Telasi 16
ByWitold J. Henisz

Michael Scholey had arrived in January 1999, as the new president of American Energy Services (AES)-Telasi. The distributor, known as Telasi, could not handle the weak demand it was seeing, on account of its antiquated equipment and Georgia's rickety electricity generation network. At the time of its acquisition of Telasi in December 1998, AES Corporation, based in Arlington, Virginia, was the largest independent power company in the world. The Georgian government had announced plans to privatize Telasi, the distribution company serving households in and around Tbilisi. Control over AES-Telasi was assigned to the manager who had identified the opportunity and made the case for the purchase–Michael Scholey. An employee at another regional distribution company in Georgia recounted how AES-Telasi warehouse employees offered to sell him meters at a bargain price. The price increases, however, sparked public protests and complaints from representatives of parliament, the Tbilisi City Council and the United Trade Unions of Georgia.