india

Updated: Jul 13, 2019 20:55 IST

The Narendra Modi government has taken objection to the decision of YSR Congress party president and Andhra Pradesh chief minister Y S Jagan Mohan Reddy to review power purchase agreements (PPAs) made during the Telugu Desam Party’s regime from 2014 to 2019 on the ground that they involved huge corruption.

In a two-page letter dated July 9 and addressed to the chief minister, Union minister of state (independent charge) for power and renewable energy R K Singh warned that revisiting the PPAs would halt the flow of foreign investments in the sector, which is very important for India to meet environmental and power needs.

On June 26, Jagan while reviewing the power sector in the state, constituted a cabinet sub-committee to probe into the alleged corruption involved in signing of PPAs by the Chandrababu Naidu government with solar and wind power producers. He alleged that the previous government had purchased solar and wind power at exorbitant rates from select companies, compared to the cheaper rates quoted by others in competitive bidding.

“The Naidu government had made excess payments to the tune of Rs 2,636 crore to these producers of solar and wind power, causing huge loss to the state exchequer,” Jagan pointed out and ordered that the energy department recover excess payments made to the power companies.

He also directed that legal action be initiated against the higher officials of the energy department responsible for the deals, the minister and the former chief minister as well. He also ordered that the sub-committee re-negotiate with the solar and wind power producing companies and cancel the PPAs, if the companies did not fall in line.

The Union minister, however, virtually ruled out irregularities in signing the PPAs and attached documents pertaining to bidding by the power producers. He pointed out that the tariffs were fixed by the Central Electricity Regulatory Commission at the national level and the State Electricity Regulatory Commission in respective states.

“Power purchase agreements are contracts binding on all signatories. If the contracts are not honoured, the investments will stop coming. For the above reasons, it will be wrong and against the law to cancel all the PPAs,” he wrote to the chief minister.

Only if there is prima facie evidence of corruption in the signing of any PPA, the state could order a probe and take action, Singh said.

He further said even the finding of irrational tariffs was not sufficient to cancel the contracts and there should be concrete evidence of malpractice in a particular case. Otherwise, the PPA cannot be cancelled.

Last month, Union energy secretary Anand Kumar also wrote a similar letter to Andhra Pradesh chief secretary L V Subrahmanyam asking him to prevail upon the chief minister to withdraw the move to cancel the PPAs. He said the Centre had set a goal to achieve 175 GW renewable energy by 2022. Revisiting the PPAs, he feared, would affect the flow of investments, he said.