Concerned over the fate of renewable energy contracts signed by the previous Chandrababu Naidu regime in Andhra Pradesh, at least 15 bankers have approached the Ministry of Power to look into the matter, after Chief Minister YS Jaganmohan Reddy announced that his government would revisit solar and wind power purchase contracts.
Further, the bankers are also planning to approach the Prime Minister’s Office (PMO) to intervene in this matter.
The matter came to notice when the new Andhra Pradesh CM announced that his government would revisit all the Power Purchase Agreements (PPAs), alleging corruption in allotment of contracts. Power sector representatives have claimed that Reddy has so far ordered cancellation of contracts worth Rs 50,000 crore, mostly in wind and solar power projects sanctioned earlier. The move has upset both power producers and bankers, who fear cancellation of contracts will result in rise of stressed loans.
“The situation in Andhra will impact the viability of many projects and will lead to rise in NPAs as money will get stuck in projects. Further, the state government’s move will impact power companies. We have written to the power ministry to resolve the issue,” a senior bank official told TMS.
Reddy has already formed a panel to review prices, saying that his government will renegotiate the contracts as according to him, the rate on which the previous government signed the contracts was high.
Meanwhile, sources in the power ministry have confirmed receiving the written representation and said negotiation is on with the state government. Anand Kumar, secretary, Ministry of New and Renewable Energy, has already written to the Andhra government over the matter, requesting it not to renegotiate the agreements.
According to the power industry estimates, Andhra Pradesh accounts for about 14 per cent of India’s installed renewable energy capacity and almost all large developers have solar or wind projects in the state. The state has about seven gigawatts (GW) of installed capacity of renewable energy projects with wind energy accounting for a little over four GW and solar about three GW. The aim is to develop about 8 GW of wind power by 2022.