In a major setback to the YS Jagan Mohan Reddy government in Andhra Pradesh, the High Court on Thursday stayed attempts by the ruling YSRCP to review and renegotiate Power Purchase Agreements (PPAs) signed by former Chief Minister N Chandrababu Naidu. The court issued the stay order, which would be in place for four weeks, while hearing several petitions by wind and solar power generating companies.
Contending that it was well within its purview to take such a decision, the state government had submitted that it had the power and was competent to be involved in the subject since electricity is in the Concurrent List. Power Purchase Agreements is a legal contract between a power purchaser and an electricity generator or provider.
The state government also said that there was no threat or coercion on the issue. The state government has now been asked to file its counter and the case will be heard on August 22.
Speaking in the Assembly, Chief Minister Jagan Mohan Reddy recently said that the re-negotiation of PPAs signed during the previous Telugu Desam Party (TDP) government was a pro-industry move.
Jagan said the government wanted to procure power at a competitive rate because all industries would shy away from purchasing power at a higher cost.
He said the government is trying to renegotiate the PPAs so that the price differential can be passed on to the poor through various welfare measures.
The YSRCP government has already announced the review of all PPAs on the ground, as the previous government had agreed to pay higher tariff through the agreements signed with renewable power producers.
The government's move to review PPAs has come under flak from various rating agencies.
The Centre has also found fault with the decision. Union Power Minister RK Singh wrote to the Chief Minister a few days ago to honour the contracts. He cautioned that this could cause investments to dry up and bring growth to a halt.