Ignoring the Centre's advise to exercise restraint on the issue of Power Purchase Agreements (PPAs), the Andhra Pradesh government on Monday decided to go ahead with the review of all PPAs.
Principal advisor to Chief Minister, Ajeya Kallam, said that all PPAs signed during the term of the previous Telugu Desam Party (TDP) will be reviewed as they were causing huge losses to state exchequer.
He said the review of all PPAs was necessary as the state agreed to pay higher tariff in the agreements signed with renewable power producers.
Union Power Minister R.K. Singh had last week written to Chief Minister Y.S. Jagan Mohan Reddy to honour the contracts. "If an impression goes out that the rule of law does not prevail or the contracts are not honoured, the investments will dry up and growth will come to a halt," Singh said.
Defending its move, the YSR Congress Party (YSRCP) government said the state would have to bear the high cost of wind and solar power for the next25 years and incur a loss of Rs 3,000 crore every year.
"We are pained because rather than appreciating the Chief Minister for trying to weed out corruption, he is being questioned for trying to stop this bleeding of our precious state resources for the financial gain of a few people," Kallam said.
He told reporters that the Chief Minister had brought the irregularities under Prime Minister Narendra Modi's notice during the latter's visit to Tirupati last month.
He said the government was deeply committed to protect and promote the interests of the investors and the rule of law through transparent policies and sustainable power prices.
"Of the 221 PPAs in wind energy, more than 70 per cent of about Rs 40,000 crore value of PPAs signed after 2014 benefitted only 5 players," he said.
He alleged that wind and solar projects were sanctioned indiscriminately by the government, knowing very well that Renewable Power Purchase Obligation (RPPO) was far surpassed, without assessing financial implications.
PPAs worth thousands of crores of rupees were signed with a handful of developers without going through a transparent procurement process, ignoring the lower rates prevalent in the country and surpassing the RPPO. There is no way this could have happened without the then leadership being aware of these irregularities, he said.
Kallam pointed out that the government constituted an expert committee on power and also a cabinet sub-committee to probe serious irregularities in PPAs.
"Once the committees give their reports, our government will examine the criminal angle, and appropriate legal action will be initiated against those responsible," he said.
The government also constituted a high-level negotiation committee to hear the developers, negotiate these high cost renewable agreements and bring down the unsustainable costs.