Union power and new and renewable energy minister Raj Kumar Singh
Union power and new and renewable energy minister Raj Kumar Singh

Andhra govt softens stand on power purchase agreements signed TDP: R K Singh

  • Andhra Pradesh has around 7,700 mega watt (MW) of solar and wind projects
  • The move comes at a time when India’s emerging green economy is expected to require investments of around $80 billion till 2022

New Delhi: The YS Jagan Mohan Reddy-led Andhra Pradesh government has softened its stand on the controversial plan to reopen the power purchase agreements (PPAs) inked under the previous TDP government.

In response to a Mint’s question on Wednesday at a conference in New Delhi, union power and new and renewable energy minister Raj Kumar Singh said that he has seen a communication wherein the Andhra Pradesh state government has clarified that they will not open all power purchase agreements (PPAs), but only in those cases where malfeasance is established.

The controversial move by the solar resource endowed state has seen concerns expressed by various investors including Japan’s Amabassador to India as it could bring 5.2 giga watts (GW) of solar and wind energy projects with an estimated debt exposure of over 21,000 crore under stress.

The Andhra Pradesh chief minister had recently met the Prime Minister Narendra Modi in the backdrop of National Democratic Alliance government pulling out all stops to impress upon the state government to not cancel the previous Telugu Desam Party’ (TDP)-led government’s decision to ink PPAs for the projects in the so called “in- pipeline," as it would have a wide ranging impact on foreign investments.

Andhra Pradesh has around 7,700 mega watt (MW) of solar and wind projects.

This comes at a time when India’s emerging green economy is expected to require investments of around $80 billion till 2022, growing more than threefold to $250 billion during 2023-30. India has become one of the top renewable producers globally with ambitious capacity expansion plans.

In an attempt to diffuse the brewing legal crisis in Andhra Pradesh that may derail India’s clean energy run, union power minister Raj Kumar Singh had written to the state government citing a danger of investor confidence erosion.

The communication reviewed by Mint stated, “It will be wrong and against the law to cancel all the PPAs. The appropriate course will be that the action for the reopening and cancelling of contracts is only taken in those cases where a primae facie case of corruption is made out based on objective evidence."

“We are also with you in your campaign against corruption and would like to see that corrupt meet their just deserts. However, we have to move in a manner which is fair and transparent and according to the law. If we do not so, the investment process and development will come to a halt," Singh’s letter said and added, “The Power Purchase Agreements are contracts binding on all signatories. If the contracts are not honoured, the investment will stop coming."

The country has an installed renewable energy capacity of about 80 gigawatts (GW) and is running the world’s largest renewable energy programme with plans to achieve 175GW by 2022 and 500GW by 2030, as part of its climate commitments.

“People have faith in the Indian legal system and that is why we don’t see that this would affect our future bids. Indian renewable energy sector is supported by investments from across the globe. Our stand is very clear. Any legal contract that has followed the due process can’t be negated unless a malafide or corruption case is established," new and renewable energy secretary Anand Kumar has earlier told Mint.

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