Jagan to review Naidu’s power purchase agreements

Jagan to review Naidu’s power purchase agreements

Chief Minister’s Principal Adviser Ajeya Kallam

The YS Jaganmohan Reddy government in Andhra Pradesh will go ahead with the review of all power purchase agreements (PPA) entered 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 as 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 also 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 Cr value of PPAs (NPV for 25 years) signed after 2014 benefitted only 5 players. It was alleged that in order to procure power at high costs, the then decision makers also introduced “Must Run” condition as an “incentive” in the state government notified wind and solar policies by concealing the long term financial implications.

“Consumer interest and Government interest was compromised and wrong calculations were filed before APERC leading to a high fixation of tariffs,” Kallam said. Wind and Solar projects were sanctioned indiscriminately by Government, without assessing financial implications.

Expert Committee

"The government constituted an Expert Committee on power and also a Cabinet Sub-committee to enquire into these serious irregularities. Once the committees give their report, our Government will examine the criminal angle, and appropriate legal action will be initiated against those responsible", he said. 

Parallelly, a high-level negotiation committee is also constituted to hear the developers, negotiate these high-cost renewable agreements and bring down the unsustainable costs in order to bring relief to the consumers and the financial distress of the AP government.

Jagan tells PM

Jaganmohan Reddy also brought to 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.