Andhra govt's move to review Power Purchase Agreements affected investment: Centre

The Centre on Thursday said that the Andhra Pradesh government's decision to re-negotiate power purchase agreements (PPAs) had not gone down well with investors, and had adversely affected investment in the county and the state.

PPAs are agreements made between a company that generates electricity and a power purchaser. 

Speaking in the Lok Sabha and responding to a query, Minister of State for Power and New and Renewable Energy, RK Singh, said that the Andhra Pradesh government's decision to reopen and renegotiate PPAs had 'violated the sanctity' of the contracts and 'affected the climate for investments'.  

The MoS also said that the Centre had repeatedly advised the state government against going ahead with its move as the agreements should be considered sacrosanct. 

"In the past few months, some solar tenders, have remained undersubscribed, which may be due to various reasons like delays in payments by distribution companies in some states, delays in adoption of tariffs by the concerned State Electricity Regulatory Commissions, and reopening of contracts by the state government of Andhra Pradesh," he added. 

Power generating firms in Andhra Pradesh are presently embroiled in a legal battle over the state government's decision to renegotiate PPAs. While the firms had moved court, they were asked to approach the Andhra Pradesh Regulatory Commission to raise their objections, and the court directed the latter to resolve the issue within six months.  

The court struck down a government order by the state, which had appointed a three-member expert committee to renegotiate the deals.  

The YSRCP government under Chief Minister Jagan Mohan Reddy has claimed that the DISCOMs (power distribution companies) in the state were going through a financial crisis and one of the main reasons for this was the higher tariffs in the wind and solar PPAs.

Read: Explained: The tussle between Andhra govt and renewable energy producers