Jagan firm on reviewing AP's power purchase agreements

Y S Jaganmohan Reddy’s government in Andhra Pradesh will go ahead with the review of all power purchase agreements (PPA) signed during the tenure of Nara Chandrababu Naidu despite the advice of the Union government not to venture into that area.

Chief Minister’s Principal Adviser Ajeya Kallam, attributing the two letters from the Union government to the handiwork of power lobby, said that all the PPAs in power Sector will be reviewed because there is a huge parity in purchase tariff.

“We noticed that the previous government purchased power at high cost from Spectrum and Lanco even though their PPAs expired in 2016. The TDP government entered into a short term PPA at a higher rate with Lanco and Spectrum after their PPAs lapsed, causing crores of rupees loss,” he pointed out.

The government says that out of the 221 PPAs in wind energy, more than 70% of about Rs 40,000 crore value of PPAs (NPV for 25 years) signed after 2014 benefitted only five players. It was alleged that in order to procure power at high costs, the then decision-makers introduced “must-run” condition as an “incentive” in the state government's wind and solar policies by concealing the long-term financial implications.

The interests of consumers and the government were compromised and wrong calculations were filed before APERC leading to a high fixation of tariffs, said Kallam.

Expert committee to check irregularities

The government constituted an expert committee on power and a Cabinet Sub-committee to inquire into the irregularities. Once the committees give their report, the government will examine the criminal angle and initiate legal action against those responsible.

Parallelly a high-level negotiation committee is constituted to hear the producers, negotiate the high-cost renewable agreements and bring down the unsustainable costs.

Jaganmohan Reddy brought to the notice of Prime Minister Narendra Modi during his visit to Tirupati about the alleged serious irregularities that took place in energy purchases. It was said that AP procured renewable energy such as wind, solar at an exorbitant rate of 23%. However, the centre has advised Jagan not to revisit the PPAs as it would undermine investor confidence.