Centre again writes to Jagan to not review power agreements; Andhra CM is unmoved
Union ministry of Power, New & Renewable Energy has once again written to Andhra Pradesh chief minister Y S Jagan Mohan Reddy asking him not to revisit the power purchase agreements signed by his predecessor Chandrababu Naidu only on the “basis of apprehension of irregularities.”
In a letter on September 19, addressed to the chief minister, Union minister of power R K Singh warned that any attempt to review the PPAs would not only send wrong signals to the investors across the world about credibility of contracts and agreements in India, but also jeopardize the entire national programme for transition towards sustainable energy.
The letter has come to light a day after the Andhra Pradesh high court asked solar and wind power producers to approach the regulator over the state government’s decision to review their PPAs for reduction of tariff. The court also struck down a government order constituting a cabinet sub-committee to review the PPAs.
Singh refuted the argument of Jagan that the state power distribution companies were in huge losses due to high power purchase costs fixed by the previous government for the solar and wind power producers while signing the PPAs. He said the discoms had suffered losses due to low consumer power tariffs charged by the previous government and not due to renewable energy costs.
The Union minister pointed out that the wind power cost of Rs 4.84 per unit in AP was much lesser than the tariff in other states like Rajasthan, Maharashtra, Madhya Pradesh and Gujarat. “The tariffs differ from state to state and area to area, depending on wind velocity, cost of land and state policies,” he said.
Globally, the minister said, tariffs for renewable energy remain uniform over the life of the plant. In fact, though thermal power appeared to be available at lesser cost at present, it would go up to Rs 20 to 22 per unit after 25 years, whereas wind power tariff will remain the same, the minister added.
“It would not be appropriate to compare the present solar tariff with that of those in the previous years. Unlike in thermal power, the entire investment in wind and solar power is made up front and the operational costs are very small. Therefore, the nominal tariff declines in real terms over time,” he said.
With regard to purchase of 70 per cent of the renewable power only from three specific companies, Singh said they had informed the Union ministry that they had enhanced their installed capacity by acquiring other firms. “It is for the state government to see and establish whether in any particular case there is any mala fide intentions, violation of procedure or adoption of corrupt practices,” he said.
The chief minister, however, defended his decision to review the PPAs. He told a meeting of state-level bankers’ committee on Wednesday that the government was trying to save public money in cancelling of the power purchase agreements.
“The results will be there for everyone to see,” Jagan said.