Union Minister of State for Power and New and Renewable Energy RK Singh had shot off a letter to the Chief Minister on July 9 in this regard.
VIJAYAWADA: Even as the YS Jagan Mohan Reddy’s government is firm on renegotiating and reviewing renewable Power Purchase Agreements (PPAs) and has initiated steps in this direction, the Centre has once again warned the State that such a move would not only be detrimental to investors’ interests but is against law.
Union Minister of State for Power and New and Renewable Energy RK Singh had shot off a letter to the Chief Minister on July 9 in this regard. Despite the caution, the government has summoned wind power developers for a meeting with the high-level negotiation committee (HLNC) on Monday to ‘hold negotiations on high-priced tariffs’.The Union minister, in his letter, observed that the growth of renewable energy sector, in which all major pension funds of the world were invested, would come to a halt if contracts were not honoured.
‘Tariffs were fixed by independent regulators, after public hearing’
“Power Purchase Agreements (PPAs) are contracts binding on all signatories. If the contracts are not honoured, the investments will stop coming in. For the above reasons, it will be wrong and against law to cancel all PPAs,” he said, suggesting that an appropriate course would be to reopen or cancel a contract where a prima facie case of corruption is presently based on ‘objective evidence’. Even though the Centre was with the State to fight corruption, he observed, it should be done in a fair and lawful manner.
Singh, in the letter, reminded Jagan that tariffs were fixed by independent regulators Central Electricity Regulatory Commission at the Centre (CERC) and State Electricity Regulatory Commission (SERC) in States after a public hearing and after examining all input costs. He even enclosed a list of tariffs fixed in various States over the past few years along with the CERC’s rate. “This will enable the State government to see if the tariff in the PPAs signed in Andhra Pradesh is reasonable or not,” he said. He added concrete evidence of malpractice was necessary to identify corrupt cases. “Where a clear cut finding to this effect can be arrived at, action can be taken for cancelling a PPA and launching a prosecution. Not otherwise (sic),” he emphasised.
Earlier on June 6, the Secretary of Ministry of New and Renewable Energy (MNRE), Anand Kumar had written a similar letter to Chief Secretary LV Subramanyam to inform Jagan that reviewing PPAs would shake investors’ confidence. However, in a review meeting on the Energy Department on June 26, Jagan had directed the officials to cancel all PPAs in the pipeline and to slap recovery notices on the stakeholders to an existing agreement. Subsequently, on July 1, the government also constituted an HLNC to review the PPA.
Notwithstanding the cautionary letters, the State government has summoned wind power developers to attend a meeting called by the HLNC. According to the letter dated July 11 by the Chief General Manager of APSPDCL, “The tariff for wind power generators for supply to Discoms through long term PPAs entered after 2012 caused unjustified burden to Discoms/end-consumers of the State. The HLNC has decided to hold negotiations on high-priced tariff issue with wind power generators on July 15.”