RK Singh Asks Andhra Pradesh CM to Exercise Restraint in Solar & Wind PPA Renegotiations

Warns it will kill the flow of investment in Andhra Pradesh’s renewable sector


The Minister for Power R. K. Singh has written to Andhra Pradesh Chief Minister Jaganmohan Reddy, cautioning him to practice restraint when it comes to renegotiations of power purchase agreements (PPAs) for wind and solar energy projects.

In his letter, Singh has asked Reddy to act in a manner that is fair, transparent, and according to the law. The investment and development processes will grind to a halt, warned Singh through his letter.

Singh further stated, “Renewable energy sector has attracted a large amount of foreign investment. Almost all major pension funds in the world are invested in India through renewable energy companies. If an impression goes out that the rule of law does not prevail, or that the contracts are not honored, then investments will dry up, and growth will come to a halt.”

Singh has pointed out to Reddy that the reopening and canceling of a contract can only be done in cases where corruption has been proved based on evidence. Only when there is a clear proof of malpractice, only then can you resort to renegotiation or cancellation.

Along with his letter, Singh has also sent a list of tariffs arrived at auctions across the country for Reddy to make comparisons.

Towards the beginning of July 2019, Reddy held a review meeting with the state’s energy department to deliberate on the recent decision to revisit the PPAs of the solar and wind power projects that were allotted during the previous government led by Chandrababu Naidu.

This decision by the state government came despite the Ministry of New and Renewable Energy (MNRE) expressing its serious concerns over the state’s impending decision to revisit the power purchase agreements it had signed with solar and wind developers during the tenure of the previous government. However, the Jaganmohan Reddy-led Andhra government did not pay heed to the MNRE’s letter of caution, and the chief minister recently announced forming a High-Level Negotiation Committee to deliberate and bring down the costs in all the high-priced PPAs for wind and solar power projects signed during the term of the previous Chandrababu Naidu-led government.

Further, a notice was also issued calling the wind power developers for a meeting. In the notice, Andhra Pradesh State Power Development Corporation Limited (APSPDCL)mentioned that a revisit would be required for all the long-term PPAs signed by the wind power developers after 2012 on the ground of higher tariffs.

It is important to note here that Andhra Pradesh is among the top five renewable energy generating states in India and as per NREDCAP data, it has 8.16 GW cumulative installations as on June 30, 2019.

Image Credit: Suzlon