Mumbai: The Andhra Pradesh High Court has stayed a move by the state government to lower tariffs paid to clean energy companies supplying power to the state, Mint has learnt. This will give private developers temporarily relief from seeing their revenue sinking.
On Wednesday, Mint reported that several renewable power producers had challenged the Andhra Pradesh government’s move to renegotiate power purchase agreements (PPAs), which could see a downward revision of current tariffs. These companies filed a writ petition in the Andhra Pradesh High Court seeking a stay on the state government’s 1 July order.
On 1 July, the state directed a high-level negotiation committee to use current tariff rates, rates prevalent at the time of commissioning of projects, and the current opportunity cost of other sources of power to benchmark and renegotiate agreements, and submit a report in 45 days. Renewable energy firms worry that if Andhra Pradesh succeeds in reducing tariffs, other states will also follow suit.
However, in a press release, the AP government defended its move to saying cancellation of PPAs is “well within its purview" and that there is no threat or coercion. “The show-cause notice issued by the discoms (power distribution companies) threatening cancellation if they don't agree for negotiation is only to mean as seeking revision of the PPA terms in accordance with the procedure under the Electricity Act.The state has contended that it intends to move the APERC (Andhra Pradesh Electricity Regulatory Commission) in that regard and the present negotiation committee is to find if a consensus can be arrived at."
Credit ratings agency Crisil has estimated that the cut in power tariffs payable to solar and wind power developers will put their debt of ₹21,000 crore at risk of default. Some private developers which supply to Andhra Pradesh have already seen their credit rating downgraded as part of the state’s 1 July directive.