BREAKING NEWS

PPAs Review: NTPC, SECI threaten legal action against AP Govt

NTPC and Solar Energy Corp of India (SECI) have threatened Andhra Pradesh power distribution utilities of legal action and have denied renegotiation of tariffs from solar plants, saying the demand does not hold any valid ground. The two central government companies have also declined to attend the meeting for renegotiating of tariffs with the state on Monday, people aware of the development said. 
 
NTPC and SECI have sent point-by-point rebuttal to the state utilities’ controversial letters dated July 12 and July 17, which sought that the power purchase agreements from the renewable energy plants be reduced to Rs 2.44 per unit retrospectively, sources said. 
 
A senior NTPC official told that it has been communicated to the Andhra Pradesh government that non-payment could invite legal action and that the tariffs are non-negotiable as the contracts were sealed with the approval of state regulatory commission.
 
The new Y.S. Jagan Mohan Reddy-led government has called a second meeting of wind energy developers and other stakeholders on July 22 to discuss the matter of renegotiating tariffs, after the first ended inconclusively on July 15. 
 
In a letter to NTPC on July 17, Southern Power Distribution of Andhra Pradesh had sought revision of tariffs from the company’s 250-mw solar power plant in Anantpur district and 1000 mw solar park in Kurnool. The tariff from the Anantpur plant has been fixed by the state's regulator at Rs 5.96 per unit while bundled power from the Kurnool park is being supplied at weighted average — around Rs 4.61.  
 
Similarly, the state’s power distribution companies had signed contracts with projects of Acme Solar (150 mw), Azure Power (50 mw), Tata BP Solar (100 mw) and FRV Solar (100 mw) at Rs 4.50 per unit through bidding conducted by SECI. 
 
SECI said it entered into power sale agreement (PSA) and back-to-back power agreements with solar companies after a competitive bid process based on viability gap funding under the solar mission. It argued that after adoption of the tariff by the state electricity regulator they become final under law and cannot be opened for negotiation. 
 
“Accordingly, we would request Southern Power Distribution Company of Andhra Pradesh to honour the PSA it has signed for purchase of 400 mw of solar power generated at solar park set up at Galiveedu Mandal, Kadapa district at Rs 4.50 /kWh, process the invoices and realise the pending payment within 15 days to avoid further late payment surcharge at 1.25% per month as per article 6.3.3 of the PSA and also further legal action,” SECI said in a letter to the discom. 
 
“It is to further state we would not be in a position to attend the meeting of high level negotiation committee scheduled on July 22 as we have made it amply clear that the PSAs have become final and are well within the provision of Electricity Act 2003 and there is no valid ground to negotiate the same,” it said. 
 
The tariff of Rs 2.44 /kWh discovered in the subsequent bidding process a year later at a different place and under different circumstances cannot change the concluded and binding agreement, the companies have told the state government. 
 
The newly elected government has decided to renegotiate its wind and solar power purchase contracts signed during the tenure of N. Chandrababu Naidu. 
 
Andhra Pradesh is one of the leading renewable energy states with a commissioned capacity of around 7,257 mw, according to consultancy firm Bridge To India. 
 

Photo Gallery