Investment in the renewable space was under a cloud after the state govt move.
Fourteen major renewable energy companies have moved the Andhra High Court.
In a major relief to the renewable energy companies invested in Andhra Pradesh, the High Court has stayed the newly elected state government’s order to review all electricity tariff under power purchase agreements (PPA) signed by the earlier government with the green companies. As per Crisil report, renegotiation of PPAs would put at risk about 5.2GW of solar and wind power projects worth Rs 21,000 crore.
The Andhra Pradesh government steered by Jagan Reddy issued an order on July 1, 2019, directing a high-level committee to renegotiate PPAs of all the renewable energy companies signed by the previous government headed by N Chandrababu Naidu, citing corruption charges.
Fourteen major renewables energy companies including ACME solar, Renew Power, Greenko Holding, Axis Wind farms, Azure Power and Mytrah moved the Andhra Pradesh High Court to seek relief on account of state government’s arbitrary move to revise tariff for competitively bid renewable projects.
“The actions of the state government were not only contrary to the Electricity Act but also the Supreme Court’s judgment that renewable energy PPAs can only be reopened to incentivise renewable projects. The High Court has correctly stayed the government decisions. This is a much-needed relief since huge investment in the renewable space was under a cloud,” said Amit Kapur, Joint Managing Partner, J. Sagar Associates, who was representing Renew Power in the court.
Meanwhile, Minister of Power and Renewable Energy RK Singh, in a letter written to the Andhra Pradesh chief minister, had dissuaded him against renegotiation of the PPAs on July 9. CNBC-TV18 learnt that the issue was also escalated to Home Minister Amit Shah on July 22, where RK Singh brought to his attention the decision of the state, which has not only alarmed the sector and the investors but also sends a negative impression to the international community about India. Singh highlighted if there is no sanctity of contracts, there will be no investment in the power as well as renewable energy sector.
The renewable energy sector in India has attracted a large quantum of foreign direct investment (FDI) for setting up of about 80,000 MW renewable energy capacity so far and the target is to reach 1,75,000 MW by 2022.