In an attempt to persuade Andhra Pradesh chief minister YS Jaganmohan Reddy against revising power purchase agreements (PPAs) with renewable power producers, which is seen as a blow to the sanctity of contracts and could potentially hurt investor sentiments, Union power minister RK Singh has written to the state to take a cautious approach in this matter. Congratulating Reddy on his recent election victory in a letter, reviewed by FE, Singh wrote: “If an impression goes out that the rule of law does not prevail or the contracts are not honoured, then the investments will dry up and growth will come to a halt.”
The new government in Andhra Pradesh has formed a committee to revise “abnormally priced wind and solar” PPAs, saying these have “resulted in unjustified burden on the consumers of the state”, besides contributing to the financial woes of state-run discoms. It believes that many of these agreements were signed with “malafide intentions”.
