Andhra dares centre on investment concerns, claims several investors lined up

Andhra Pradesh government on Monday attempted to allay the apprehensions aired by the centre on likely adverse impact on foreign investments, if the state were to cancel or renegotiate power purchase agreements (PPAs) in the renewable energy sector.

Addressing the media in Amaravati on Monday, the Andhra Pradesh chief minister YS Jaganmohan Reddy’s principal advisor Ajay Kallam, who also heads the chief minister’s office, said, “We want to reiterate that there are investors who are ready to invest today in 5,000MW of power at Rs 2.70 (a unit) without PPAs.”

The stand of Andhra government comes days after serious concerns were raised through detailed letters by the union renewable energy minister RK Singh and energy secretary Anand Kumar. They had asked the Andhra government to desist from its move to cancel solar and wind PPAs or renegotiate tariffs, while warning of the adverse impact on foreign investment flows into India’s renewable energy sector.

Rebutting these concerns, Andhra government’s representative Kallam said many investors were waiting at the doorstep of the state government evincing interest to offer power at low costs without having to enter into any long-term agreements. Investors require some land on lease and memorandum of understanding to invest on 5,000MW power generation, he said.

Chief minister Jaganmohan Reddy was committed to renegotiating the tariffs in the interests of the state and to save public money,. Kallam told reporters.

The new state government headed by YSR Congress Party has been alleging irregularities and corruption in PPAs entered into during the term of the previous government led by Telugu Desam Party government of N Chandrababu Naidu, allegedly causing around Rs 2,500 crore of loss to the exchequer annually.

Further, the Andhra government representative said the state has every right to review the PPAs or cancel them similar to the way centre did in some cases. In this context, Kallam said, “The government of India itself in some of the cases, not so long ago, have batted for post-bidding tariff hike and amended the tender conditions in the interest of investors then like Adani Power, Tata Power and Essar. Why cannot the state governments amend PPAs in the public interest?”

The Andhra CM’s principal advisor said the state government will probe the alleged irregularities involving SoftBank Energy in the high tariff PPAs that erstwhile Andhra government, headed by N Chandrababu Naidu, had entered into. “Solar Energy Corporation, which had last year called tenders for 3,000MW, had cancelled 2,400MW tenders alleging that SoftBank Energy had indulged in some manipulations,” Kallam said, adding that “The same SoftBank Energy is a major partner in a contract for 350MW at solar park at Kurnool at Rs 4.63 a unit.”

In September last year, SoftBank Energy had denied allegations of cartelisation and said it had stuck to bidding norms set by the Indian government and had practiced ethical norms across the world.