Jagan Mohan Reddy defies centre; to review green PPAs
The move comes amid uproar by the renewable energy players on the likely adverse impact on the investor confidence and qualms by the analysts over the outcome of such reviews
The move comes amid uproar by the renewable energy players on the likely adverse impact on the investor confidence and qualms by the analysts over the outcome of such reviews. Reddy ordered a probe into the renewable energy PPAs claiming ?2,636 crore of loss to the state exchequer through preliminary review and hinted at initiating legal action against those responsible.
Further, the YSR Congress government has decided to recover the amounts from those responsible for the alleged irregularities in the PPAs including the former energy department officials, power minister and the then CM N Chandrababu Naidu of Telugu Desam Party (TDP) government.
This is the second time in the last 15 years that the PPAs entered into by the Chandrababu Naidu government were being reviewed. Nearly a decade ago, YS Rajasekhara Reddy (YSR), then chief minister of undivided AP and father of Jagan Mohan Reddy, had ordered a review of PPAs signed during Naidu’s earlier regime. “Nothing much was achieved through a review of PPAs earlier by the Rosaiah Committee appointed by YSR and not much can be expected from the proposed review now being ordered by Jagan Mohan Reddy as the PPAs were approved by the regulatory commissions,” said political analyst Manchala Srinivasa Rao. Jagan Mohan Reddy has ordered appointing a cabinet sub-committee to look into the alleged irregularities in PPAs involving renewable energy projects of wind and solar, and to avail the assistance of ACB, CID, vigilance, enforcement department and others for probe. On June 6, the Union renewable energy secretary Anand Kumar had advised the AP government to desist from revisiting PPAs saying doing so “shakes the confidence of investors in the sector and adversely affects the future bids and investment in the state and the country.” Kumar had said various renewable energy project developers sign PPAs with the state government either under Sections 62 or 63 of the Electricity Act. The tariff is fixed by the State Electricity Regulatory Commission (SERC) in line with the Central Electricity Regulatory Commission’s guidelines in the first case. In the second case, the tariff is arrived at through a transparent open competitive bidding basis. “In both cases, SERCs conduct public hearings before adopting the tariffs and signing the PPAs,” said Kumar.
Airing similar views, Thilotham Kolanu, CEO of Greenstratos Consulting, said global and domestic investors should not be punished for investing and developing renewable energy projects by raising equity and debt based on the wind power tariff set by the public regulatory institutions like AP Electricity Regulatory Commission (APERC), which was honoured by the government through PPAs.
“When it comes to solar, the tariff was discovered through a reverse bidding mechanism, hence it needs to be honoured,” said Kolanu, adding that a probe should be ordered if APERC had not revised the wind tariff when finance and development costs subsequently reduced globally and also if the same tariff was given to solar projects that were not allotted through reverse bidding process.
“There were no irregularities whatsoever and all the PPAs were approved by the electricity regulatory commission headed by former High Court judge and through a transparent public hearing mechanism. The unfounded allegations and harassment by the YSR Congress government will affect the investor confidence and ease of doing business rankings of Andhra,” said Cherukuri Kutumba Rao, senior TDP leader and former vice chairman of AP Planning Commission.
Referring to the allegations against Polavaram irrigation project, Rao said, “YSR Congress government could not prove any of its allegations about irregularities. The fact that there were no irregularities was endorsed by none other than the union government recently while clearing the revised estimates of Polavaram submitted by the then TDP government.”