Andhra discoms will go bust at current wind, solar tariffs: State energy department spokesperson


New Delhi: Electricity distribution companies in Andhra Pradesh will go bust if the state energy department continues to pay for wind and solar power at current tariffs, the spokesperson of the Andhra Pradesh energy department said and argued that renegotiation of 139 wind and solar power purchase agreements is the only workable solution.

In an exclusive interview to ET, Chandra Sekhar Reddy, spokesperson of the department, also said that the tariffs of Rs 2.43 per unit for wind plants and Rs 2.44 per unit for solar plants quoted by the state in its letters to developers are negotiable.

“In negotiations, both the parties take a stand and arrive at mutually agreed solutions. The discoms thus came up with their prices of Rs 2.43/2.44 per unit tariff. Similarly, the high cost renewable sellers have their price of Rs 4.84 per unit. Once negotiations take place we are confident an amicable solution can be arrived at,” said Reddy.

Renewable energy companies have approached the Andhra Pradesh High Court against the state’s renegotiation bid. Ambassadors of many countries including Japan, Canada and France, financial institutions and renewable energy developers have written to Prime Minister Narendra Modi, Union power minister RK Singh and state chief minister YS Jagan Mohan Reddy expressing apprehension on reopening of legal contracts.

Reddy said the state’s power distribution companies have breached their borrowing limits and have not made payments to electricity generators since July 2018. Unpaid power generator dues of the discoms stand at about Rs 20,000 crore. In 2017-18, discoms resorted to borrowings to pay the dues and hence now cannot raise more money.

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Power

“Unless the generators rework their tariffs by reducing their large returns or the state government takes responsibility of paying directly to project developers there is no way that the high cost power can be purchased in a sustainable manner by discoms,” Reddy said in a response to queries emailed by ET.

Arriving at an amicable solution will safeguard the renewable investments and enable discoms and the state to make payments to the developers regularly, he said.

“The state government is willing to look into the commitments made by the state to the developers in the agreements signed with them,” said Reddy. He also said the state first entered into agreements with the renewable energy firms and after the projects were set up, the discoms were instructed by the state to sign power purchase agreements (PPAs). The high cost energy contracts are affecting the discoms, consumers and industrialisation of the state, said Reddy.

Though conscious of the investment sentiments, the state believes if discoms contract power at high rates and are unable to pay, it is not in the interests of the investors, he said. Reddy said since most of these assets were acquired by the present developers on operational basis, negotiations will be done with the current owners.





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