Amaravati: Central Government recently wrote a letter to Andhra Pradesh government to re-think its decision on cancellation of PPAs (Power Purchase Agreements), which were signed by the previous Chandrababu Naidu regime in the state.
Union Minister of State for Power and Renewable Energy, RK Singh, wrote a letter to Andhra Pradesh Chief Minister YS Jagan Mohan Reddy on 9th July, 2019 requesting him to honor Naidu regime's PPAs.
Recently, Jagan Reddy's government launched a probe on PPAs which were signed during Naidu regime in the state. The probe found that there is an excess price of Rs 2,686 Crore which was paid for PPAs of Wind and Solar during Naidu’s govt.
CM Jagan Reddy ordered his officials to discuss with the suppliers and return the excess money spent on PPAs. Following Reddy’s order, centre wrote a letter to the Andhra govt, requesting them not to withdraw or cancel Naidu regime PPAs.
In his letter, Union Minister RK Singh reminded Reddy that “Power Purchase Agreements are contracts binding all the signatories. If the contracts are not honored, the investments stop coming.”
Andhra Pradesh government's main objection is on Power Tariffs. The state alleges that compared to other states, the tariff levied in AP is higher.
Responding to tariffs, Singh said, “Tariffs are fixed by regulators, who are independent. At the Central level, there is a Central Electricity Regulatory Commission (CERC) and at the State level, there are different State Electricity Regulatory Commissions (SERCs) and these commissions fix tariff rates. These commissions fix tariff rates after public hearing and examining all the costs,” Singh wrote in his letter.
The Union Minister clarified, “For the above reasons, it will be wrong and against the law to cancel all the PPAs. The appropriate course would be that action for cancelling a contract is only taken in those cases where a prima facie case of corruption is made out based on the objective evidence,” he added.
The Union Minister also enclosed the comparative analysis of wind and solar energy bids approved by various States. He asked Reddy to thoroughly examine all the documents before taking a decision.
“The Tariff for solar and wind generation in different states will be different depending upon the solar insolation for solar energy and the wind speed for wind energy,” Singh wrote in his letter.
Singh also wrote, “Allegations alone will not be sufficient, there will be a need to provide concrete evidence of malpractice/malfeasance to be able to come to a conclusion of corrupt practices in a particular case. When a clear finding to this effect can be arrived at, action can be taken for cancelling a PPA and launching a prosecution,” he added.
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