Andhra Pradesh

In power, Jagan determined to review Naidu’s power deals

First the Secretary in the Ministry of New and Renewable Energy wrote to the Andhra Pradesh Chief Secretary on 6 June, imploring him not to revist the Power Purchase agreements (PPAs) signed with solar and wind developers. When it did not have the desired effect, a month later, Union Power minister RK Singh wrote to chief minister Jaganmohan Reddy asking him to exercise restraint when it came to renegotiating PPAs. Singh did not mince words, telling Jagan that the investment and development process will grind to a halt.

“If an impression goes out that the rule of law does not prevail or that the contracts are not honoured through renewable energy companies, investments will dry up and growth will come to a halt,” wrote Singh, pointing out that reopening and cancelling of a contract can be done only in cases where corruption has been proven based on evidence. 

So far the Jagan regime has not shown any inclination to heed to the advice coming from Delhi. In an order on 1 July, it directed a negotiation committee to prepare the roadmap to renegotiate agreements and submit its report by 15 August. 

The alarm bells have clearly rung in Delhi. An independent agency, CRISIL has now warned that the Andhra plan to reopen the PPAs signed by the Chandrababu Naidu government could bring 5.2 giga watts (GW) solar and wind energy projects with a debt exposure of over Rs 21000 crore under stress. Its report says Rs 10600 crore could be at an immediate risk of default. Andhra Pradesh has 7700 megawatt of solar and wind projects.

In Andhra Pradesh, Naidu is emboldened by the Centre’s missives to Amaravati and has accused the YSR Congress government of misrepresenting facts and indulging in mudslinging. Significantly, the Jagan government has kept Ajay Jain, who was Energy secretary in Naidu’s government without a posting since it came to power. 

What has emboldened the TDP is the stand taken by NTPC. TDP general secretary Nara Lokesh produced letters written by NTPC on 22 July to the Andhra Pradesh Southern Power Distribution Company Limited. It states that the PPA between NTPC and the power distribution companies in the state “provides for a tariff lesser than the generic tariff determined by the Central commission”.

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