The Centre has asked the state to open Letters of Credit (LCs) for purchase of power from wind and solar power producers by October 15.
The Andhra Pradesh government on Tuesday moved the High Court, escalating matters with the Centre, over orders of the Union Power Ministry, which asked the state to open Letters of Credit (LCs) for purchase of power from wind and solar power producers by October 15.
The Centre said that the LCs had to be opened, to ensure timely payments to the power companies.
A lunch motion petition was filed in the High Court on Tuesday by the power distribution companies (DISCOMS) of Andhra Pradesh, who argued that it was not possible to issue LCs, as they were undergoing a financial crisis. They argued that such a move would only hurt their finances further.
“The Central government as a third party cannot interfere in the contract conditions of the Power Purchase Agreements (PPA). It has no judicial power to put a few Discoms out of the power exchange and short term open access that are governed by the Central Electricity Regulatory Commission (CERC),” the DISCOMS said in their representation.
Following this, the court said that it was keeping the power ministry’s orders in abeyance for a period of three weeks and posted the case to November 5 for further hearing.
Power generating firms in Andhra Pradesh are presently embroiled in a legal battle over the state government’s decision to renegotiate power purchase agreements (PPAs). While the firms moved court, last month, they were asked to approach the state’s Regulatory Commission to raise their objections, and the court directed the latter to resolve the issue within six months.
PPAs are agreements made between a company that generates electricity and a power purchaser. The Centre has repeatedly stated that the move would affect foreign investments in the renewable energy sector.