APTEL provides relief to solar company in Andhra Pradesh

M. Ramesh | | Updated on: Jul 31, 2019
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Andhra Pradesh discoms terminated 21 PPAs

The Appellate Tribunal for Electricity (APTEL) on Monday has asked electricity distribution companies (discoms) owned by Andhra Pradesh government and the its electricity regulatory commission, not to initiate any precipitative or coercive action against the Ayana Ananthapuramu Solar Pvt Ltd.

This includes cancellation, termination or deemed termination of the power purchase agreement (PPA) signed with the solar power company.

The petitioner, Ayana Ananthapuramu Solar Pvt Ltd, won rights to put up a 250 MW solar power project in Andhra Pradesh through a capacity auction conducted by the government of India-owned, SECI.

SECI would buy the power from Ayana (and other winners) and sell it to the discoms in Andhra Pradesh under a back-to-back power sale agreement with the discoms.

However, under the PSA , the discoms should approach the Andhra Pradesh Electricity Regulatory Commission for tariff. If the Commission does not determine the tariff within a “specified time”, the power sale agreement “shall stand cancelled and terminated with no liability to either party.”

The Commission is yet to determine the tariff—the petition for tariff determination has been lying with the Commission since February 2018.

A few days back, the Andhra Pradesh discoms terminated 21 PPAs, involving 776 MW of wind power capacity, signed between Axis Energy, a wind power company, and the discoms—on the ground that they could do so, since the tariffs had yet to be determined.

One of the two discoms, APSPDCL, said in a memo to the regulator - “In view of the precarious fnancial position of AP discoms and the consequent inability to bear the additional financial burden involved in purchasing power from the 21 wind developers, the discoms had decided to withdraw the PPAs.”

Upon seeing this, Ayana Ananthapuramu feared that a similar fate might befall it.

“The petitioner (Ayana) has approached this tribunal (APTEL) apprehending similar treatment to them at the hands of the discoms concerned,” the tribunal said in its order of Monday.

“We are of the opinion that there is genuine apprehension so far as the petitioner is concerned,” it said, directing the discoms not to cancel Ayana’s PPA on the grounds that the state regulator had not yet determined the tariff.

Shock waves from AP

The move of the Andhra Pradesh government to renegotiate the tariffs in the signed and sealed agreements has sent shock waves across the country, bringing into question the very sanctity of agreements. “The state government’s move involves 5,200 MW of renewable energy projects, with bank debt of over Rs 21,000 crore,” according to the rating agency, CRISIL.

Developers (energy companies) are confident of winning the case, but say that it is of little help. “We have to live with him (Jaganmohan Reddy) for five years,” said one executive of a developer, who requested not to be named.

Another observed that the renewable energy companies were caught in the political cross-fire between Reddy and his predecessor and arch rival, Chandrababu Naidu. Reddy has taken a stand that Naidu had agreed to overpay the energy companies, implying graft.

Interestingly, Reddy is preparing to convene an international investors meet in the state. “With what face is he going to meet the investors?” said a wind power company executive rhetorically.

Published on July 31, 2019

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