The Centre’s initial investigations have found no merit in allegations levelled by Andhra Pradesh Chief Minister YS Jaganmohan Reddy that the previous government led by N Chandrababu Naidu favoured top renewable energy firms — Greenko, Renew Power and Mytrah Energy — with longterm contracts at exorbitant rates.
Power and renewable energy minister RK Singh said Reddy’s letter was forwarded to the ministry of new and renewable energy (MNRE), which is examining the issues. A senior government official said prima facie, there is no evidence of mala fide as most of these assets of the companies in question were purchased on operating basis, and tariffs were approved by the state electricity regulator.
Singh has earlier written to Reddy citing concerns that renegotiation of contracts will hurt investment sentiment and action should be taken only against companies proven guilty. The Japanese ambassador has also expressed his concern to the state.
A final report by the MNRE is awaited. Renew Power declined comment on the issue as the matter is sub-judice. The Andhra Pradesh High Court on Thursday heard renewable energy companies that are against the state’s bid to renegotiate contracts. The next hearing will be on August 28. Greenko promotor Mahesh Kolli declined to comment. Mytrah Energy could not be contacted for comment.
Reddy in his letter to Prime Minister Narendra Modi submitted a month ago alleged that the power purchase agreements (PPAs) were signed without requirement for power and the Naidu-government amended laws to ensure that the state regulator facilitates these irregularities. He alleged that this was a “scam” and that contracts should be renegotiated.
Reddy said majority of the contracts have been executed to secure undue benefit to a few developers and it is necessary to take a tough stand. “Under the garb of compliance with renewable power purchase obligations (RPPO) mandating renewable energy consumption of 5%-11%, Andhra procured about 23% of high cost renewable power, putting heavy burden on the state. It is surprising to know that out of the 3494-mw of wind energy generation capacity, about 63% of the tie-up was with three developers alone (Greenko, Renew and Mytrah ) at exorbitant tariffs.”
He said even on conservative basis, the loss caused to the state exchequer owing to the policies of the previous government is about Rs 5500 crore during the last three years and about Rs 3000 crore every year.
Reddy said the state was he conscious of plight of unscrupulous investors but said they have taken informed risks. The fact that the state discoms are in financial distress and there is a constant rise in state debt, now at Rs 2,58,000 crore, is widely known, he said. “We should not lose sight of the fact that had the investors exercised financial discipline and prudence, they would have not attached much relevance to the commitments made by the previous government which for reasons described above are unjustifiable,” Reddy said in his letter.
He said he inherited a troubled sector with unpaid dues to generators by discoms at Rs 20,000 crore, accumulated discom losses of Rs 15,000 crore, discoms with exhausted borrowing limits, increased annual revenue gap from around Rs 3000 crore to Rs 7000 crore in last three years due to high cost renewable energy purchases and unavoidable payment of fixed costs to thermal power generators to accommodate the high cost renewable power.
He said even on conservative basis, the loss caused to the state exchequer owing to the policies of the previous government is about Rs 5500 crore during the last three years and about Rs 3000 crore every year.
Reddy said the state was he conscious of plight of unscrupulous investors but said they have taken informed risks. The fact that the state discoms are in financial distress and there is a constant rise in state debt, now at Rs 2,58,000 crore, is widely known, he said. “We should not lose sight of the fact that had the investors exercised financial discipline and prudence, they would have not attached much relevance to the commitments made by the previous government which for reasons described above are unjustifiable,” Reddy said in his letter.
He said he inherited a troubled sector with unpaid dues to generators by discoms at Rs 20,000 crore, accumulated discom losses of Rs 15,000 crore, discoms with exhausted borrowing limits, increased annual revenue gap from around Rs 3000 crore to Rs 7000 crore in last three years due to high cost renewable energy purchases and unavoidable payment of fixed costs to thermal power generators to accommodate the high cost renewable power.
Source: economictimes.indiatimes
