Home > Companies > News > NTPC offers sops to keep Andhra from revoking contracts

NEW DELHI : In an attempt to broker a truce with Andhra Pradesh over its decision to relook at renewable energy contracts, state-run NTPC Ltd has offered to buy 300MW of green power from the cash-strapped state.

The sweetener was offered to prevent Andhra Pradesh from renegotiating power purchase agreements inked by the previous state government.

Scrapping or renegotiating contracts could potentially deter foreign investors and hurt India’s ability to attract overseas investments amid slowing economic growth.

The offer to buy electricity at “mutually agreed rates" was made by NTPC chairman Gurdeep Singh to the state government led by chief minister Y.S. Jagan Mohan Reddy at a meeting in November.

“We are trying to ready a solution. The Andhra Pradesh government has been offered sweeteners," a senior Union government official said on condition of anonymity.

Queries emailed to the spokespeople of NTPC and the Union ministry of new and renewable energy on Tuesday evening remained unanswered.

Andhra has India’s second-largest installed capacity of clean energy, accounting for around 10% of the country’s renewable energy capacity, with investments of around 60,000 crore.

State energy secretary N. Srikanth confirmed the development. “We are yet to receive a formal proposal. Once we get it we will take a decision," he said.

The state has around 7,700MW of solar and wind power projects. It has 4,092MW of installed wind power projects awarded through feed-in tariffs, and 3,230MW of solar power projects awarded through competitive bidding. Andhra owes 20,000 crore to all power generators in unpaid bills.

NTPC plans to use the electricity bought from Andhra Pradesh to bundle it with power generated from its stations to bring tariffs down.

According to government documents reviewed by Mint, “NTPC may buy renewable power from Andhra Pradesh for bundling scheme of government of India at an appropriate price."

The Union government has been trying to seek a solution to the issue, given that marquee investors such as Goldman Sachs, Brookfield, SoftBank and World Bank’s International Finance Corp. have invested in the state’s clean energy projects. Mint reported on 29 November about a compromise formula struck during a meeting attended by Union and state government representatives on 7 November. However, the hard-fought compromise floundered.

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