Chief Minister Y.S. Jagan Mohan Reddy has received yet another word of caution against reviewing the wind and solar Power Purchase Agreements (PPAs) after Ministry of New and Renewable Energy (MNRE) Secretary Anand Kumar’s advice to leave the agreements intact, lest investor confidence should take a beating.
This time, Union Minister for State for Power and New and Renewable Energy R.K. Singh purportedly shot off a letter to the Chief Minister a few days ago suggesting that it will be wrong to cancel the PPAs and reopening and cancelling contracts should be done only in instances where there are prima facie cases of corruption backed by objective evidence.
Mr. Singh stated that the wind and solar power tariffs would vary from State to State depending on the capacity utilisation factor, wind speeds and solar insulation respectively, and Mr. Jagan Mohan Reddy could go through a comparative chart to see whether the tariffs in the PPAs signed in A.P. in the previous years were reasonable or not.
There should also be concrete evidence of malpractice or malfeasance to arrive at a conclusion that corruption took place in the power purchases.
The Chief Minister should, therefore, get the matter examined before proceeding to review the PPAs and make it a point that continued investments in the renewable energy sector was important for the environment and power supply, the letter said.
The Union Minister said the renewable energy sector in India attracted huge foreign investments and almost all major pension funds in the world had invested through the local renewable energy companies.
If an impression was created that the rule of law does not prevail or that contracts would not be honoured, investments would dry up and growth would come to a halt.
He highlighted the fact that the tariffs were fixed by independent regulators (the Central Electricity Regulatory Commission and State Electricity Regulatory Commissions) on the basis of feedback obtained in public hearings and after examining the input costs. The PPAs were contracts that are binding on all the signatories, he added.
