VIJAYAWADA: Union Minister of State for Power and New and Renewable Energy RK Singh said that Power Purchase Agreements (PPAs) are sacrosanct and that no agreement can be reviewed. “High penalty provisions will be included in the proposed amendment to the Electricity Act to prevent review of PPAs,” the minister was quoted as saying on Thursday, on the eve of YS Jagan Mohan Reddy’s diplomatic outreach summit aimed at showcasing Andhra Pradesh as a desired destination for investments and trade.
Speaking at a convention in the national capital, the Union minister spoke about the recent row over renewable power tariff renegotiations proposed by the Andhra Pradesh government. “Power Purchase Agreements are sacrosanct. No concluded agreement can be opened.” Singh also recalled his letter to Chief Minister YS Jagan Mohan Reddy, advising against reopening of the PPAs as such a move might hit investments.
It may be recalled that the YSRC government constituted a High-Level Negotiation Committee (HLNC) to review and renegotiate the renewable PPAs, alleging that the previous government entered into pacts with generators for a higher price leading to a burden of Rs 2,636 crore to the exchequer.
It had also cancelled 21 proposed PPAs with wind power generators. The move triggered panic among the power generators, who subsequently moved the High Court, prompting the Union Ministry of New and Renewable Power to write a series of letters advising the State government against it. Independent credit rating agencies too expressed concern that renegotiation of agreements would further burden the debt-ridden power utilities in the State.
While the Solar Energy Corporation of India and the National Thermal Power Corporation (NTPC) Ltd refused to lower tariff, private players moved court, which suspended the State’s order constituting the negotiation committee. The High Court posted the matter to August 22 for further hearing.
Meanwhile, renewable power generators, last week, moved the High Court once again, accusing the State Load Despatch Centre (SLDC) of curtailing solar and wind power generation.
In an interim order last week, the court said that the SLDC or APTransco cannot curtail power generated from such projects which have ‘must-run’ status. In the formal order made available earlier this week, the court ordered APTransco to discharge its statutory functions ‘fairly’ and ‘refrain from arbitrary curtailment’ of power generation. The matter was listed to be heard on Wednesday, but the court was adjourned.
On August 1 too, the MNRE had written to the Chief Secretaries of all States that curtailment of renewable power without intimating the generator in writing and for reasons other than grid safety can’t be done.
If done, the respective States would have to bear the losses incurred by the generators, the ministry said in its letter.