The Andhra Pradesh Government’s move to review and bring down the purchase cost of wind and solar energy could aggravate the problem of delayed payments from distribution companies.
This could lead to stress of about 5.2 GW of renewable projects with estimated debt exposure of over ₹ 21,000 crore, according to rating firm Crisil.
Nearly half of this capacity is at higher risk of default since they lack liquidity support beyond project level, Crisil stated.
The order, issued on July 1, 2019, directs a high-level negotiation committee to use current rates, rates prevalent at the time of commissioning of projects, and the current opportunity cost of other sources of power to benchmark and renegotiate agreements. It has asked the panel to submit report to the state in 45 days.
