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Renewable energy producers struggle to stay afloat

Renewable energy producers struggle to stay afloat

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Vijayawada : Independent power producers (IPPs) in renewable energy sector in the state are struggling to stay afloat as the government has delayed clearing their dues for months, even as they wait for a direction from the Andhra Pradesh Electricity Regulatory Commission (APERC) on renegotiating their power purchase agreements (PPAs) with the government.

“The AP high court declined to intervene in the petition filed by the IPPs over renegotiation of PPAs signed with the government when N Chandrababu Naidu was the chief minister. Instead, the high court, on September 24, directed the APERC to decide on the PPAs,” a former senior executive with an IPP told TOI.

“The high court added the caveat that till the APERC rules on the PPAs, the IPPs would have to accept the new price of Rs 2.80 per unit for wind power as demanded by the government. It gave the APERC six months to resolve the issue,” the executive, whose former employer has nearly 2,000 megawatts of wind and solar power installations in the state, said.

According to the director of another IPP based in Hyderabad, the firms have been pushed into a corner as their bills haven’t been cleared for the last 10 months, with the last payment done when the TDP government was in power. “The YSRC government offered us Rs 2.80 per unit of wind power, when the rate negotiated in the PPAs was Rs 4.80 per unit. But the more troubling aspect is that the government is not paying our bills,” the director of the Hyderabad-based IPP said, requesting anonymity.

AP had set up an implementing agency, Andhra Pradesh Solar Power Corporation Pvt Ltd (APSPCL), a joint venture company in which 50% of equity is held by the Solar Energy Corp of India, 41% by APGENCO and 9% by NREDCAP to develop solar energy parks in the state with all the infrastructure facilities like land, internal evacuation, roads and drains, water etc.

The ministry of new and renewable energy had sanctioned 28 solar parks in India with a total installed capacity of 20,000 MW. Four solar parks with a total capacity of 4,000 MW were sanctioned for AP. “Each MW of renewable energy, wind and solar, costs an average of Rs 7 crore. The IPPs have invested more than Rs 38,000 crore in these projects, of which 75% is debt and 25% equity. Servicing this debt has become a huge burden for the IPPs, so much so that many IPPs are looking to sell off their projects in AP to lessen their debt burden. The IPPs are in a double bind because on the one hand they have to service their debt, while on the other they are yet to get paid for the power supplied to APTransco,” he said.

According to another former executive with an IPP with power assets in AP, while the APERC, which was constituted only on October 30, is expected to give its ruling soon, the IPPs are now caught in the pincer of high debt and unpaid bills. “Many of the IPPs will soon be unable to service their debt and could be declared NPAs by the lenders,” he feared.

Source : timesofindia
Anand Gupta Editor - EQ Int'l Media Network