This is not the first time that the Centre has voiced unhappiness with the YSRCP government in Andhra Pradesh on its stand to cancel the power purchase agreements.

Will hurt investments Union Power Min on Andhra govt cancelling power agreements
news Tuesday, September 10, 2019 - 08:57

The Union government has once again expressed dissatisfaction over the YSRCP government’s decision to review Power Purchase Agreements (PPAs) signed by the previous TDP-led government in Andhra Pradesh. 

Union Minister for Power and New & Renewable Energy RK Singh on Monday called the review decision ‘unfortunate,’ expressing fear that the move would affect foreign investments in the renewable energy sector. According to The Hindu, Singh said that Chief Minister YS Jagan Mohan Reddy was informed even during his Delhi visit last month, that the cancellation of PPAs was a wrong move. 

Singh reportedly said that it would be more advisable to take action in particular cases when there was concrete evidence of illegality, rather than cancelling all contracts without proper evidence. “If you start abrogating contracts, then people will stop coming and investing… I had told him (Jagan) that this will disrupt the investments and that has happened,” Singh said, according to TNIE. 

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

In his first few months in office, Jagan reviewed many decisions made by his predecessor, Chandrababu Naidu, which included the PPAs. PPAs are agreements made between a company that generates electricity and a power purchaser. In effect, the government is seeking to withdraw 21 PPAs with renewable energy companies.

The government had 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.

Minister RK Singh had earlier written to the state government requesting not to cancel the agreements, but Jagan remained defiant, saying, “We have inherited a bankrupt exchequer with a huge deficit of Rs 2.62 lakh crore, the DISCOMs’ unpaid generator dues of Rs 20,000 crore and accumulated losses of DISCOMs of Rs 15,000 crore.”

Commenting on the DISCOMs’ unpaid dues towards renewable energy producers, Singh said on Monday that he had discussed the matter with the state government and he was confident that they would pay the dues. 

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