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AP's stance on clean energy PPAs affecting foreign investments: Union power minister

Union power minister says state govt was free to act against any irregularities, it should not take blanket action without any material evidence.

, ET Bureau|
Sep 10, 2019, 10.55 AM IST
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“People come and invest in this country with a faith that any contract they sign will be honoured. If you start abrogating contracts, then people will stop coming and invest,” said Singh.
Hyderabad: The decision of the YS Jaganmohan Reddy-led government in Andhra Pradesh to renegotiate wind and solar power purchase agreements (PPAs) has started affecting global investments in India, said Union power and renewable energy minister RK Singh.

Responding to queries from media persons in Hyderabad on Monday, the Union minister said though the state government was free to act against any irregularities, it should not take blanket action against all renewable energy developers without any material evidence.

“What has transpired is what exactly I feared,” said Singh, referring to his repeated apprehensions and appeals to the state government on the issue.

However, Singh did not elaborate on the quantum of foreign investments affected by Andhra Pradesh government’s stand on renegotiating renewable energy PPAs.

Last month, Japan had cautioned chief minister Reddy that the government’s efforts to slash renewable energy tariffs by renegotiating contracts had unnerved global investors and affected the business environment.

Andhra Pradesh is one of the leading states in the country to attract investments from Japan, France, Europe and South Africa, among others, in clean energy projects.

The Union minister said he had spoken and written to Andhra Pradesh CM expressing serious concern over the issue. “People come and invest in this country with a faith that any contract they sign will be honoured. If you start abrogating contracts, then people will stop coming and invest,” said Singh.

He said the Indian renewable energy sector was largely driven by foreign investments as the world saw India as an outstanding market based on rapidly growing capacity additions and the legal contracts signed. “I told him (Reddy) that this (the government’s stand on renegotiating PPAs) will disrupt investments and that has happened,” said Singh.

The Union minister’s statement comes a week after he wrote a detailed letter to Reddy saying that wind and solar projects in the state were staring at the threat of becoming non-performing assets as the state distribution companies didn’t clear dues of over Rs 2,000 crore.

Concerned over the adverse impact on global investments in India after repeatedly writing and speaking to chief minister Reddy, the Union power ministry held parleys with the Prime Minister and the home minister on the issue. Singh said the Andhra Pradesh CM was in Delhi to meet the PM and the home minister and submitted his government’s point of view through a letter. “We will be replying to that letter,” he said.

Singh said, “Our stand is very clear. If you come across any concrete evidence of illegality, please go ahead and take action as per the law. But you cannot reopen all the contracts across the board without any material evidence.”

The Reddy government, claiming that the clean energy PPAs were signed by the previous regime of N Chandrababu Naidu at higher rates involving corruption, the decided to renegotiate all PPAs soon after coming to power in May. Contesting the government’s decision, the clean energy developers had moved various legal forums and obtained stay orders. Hearings are currently going on.

Andhra Pradesh has a total commissioned capacity of 7,257 megawatt of clean energy, comprising of 3,279 mw of solar and 3,978 mw of wind power, according to a report by consultancy firm Bridge To India.

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