Vijayawada: The Y.S. Jagan Mohan Reddy government appears to be determined to review the Power Purchase Agreements (PPAs) signed by the previous government despite the Centre red-flagging the procedure.
Two days after Union minister N.K. Singh wrote to Mr Reddy on the PPAs, the Chief Minister’s principal adviser Ajeya Kallam amply clarified that the PPAs will be reviewed.
Talking to mediapersons, Mr Kallam said that during the past five years, PPAs were entered for wind and solar energy sectors and finalised at exorbitant prices. “The previous state government made agreements for 25 years at exorbitant prices which do not exist in any other part of the country. These agreements will cost the state exchequer Rs 25,000 crore for 25 years,” he said.
“This is the main reason we want to review the PPAs,” Mr Kallam said. He said that only five companies were responsible for 70 per cent of the PPAs. “Of the 221 PPAs in wind energy, over 70 pc (about Rs 40,000 crore value of PPAs) were signed after 2014 benefited only five players. State policy has been tweaked,” he said.
He said that in order to conduct an inquiry, the government had constituted an expert committee on power and a Cabinet subcommittee to enquire into the irregularities. Once the committees give their report, the YSRC government will examine the criminal angle, and appropriate legal action will be initiated against those responsible.
He said a parallel high-level negotiation committee was constituted to hear the developers, and negotiate with them to bring down the unsustainable costs in order to bring relief to the consumers and the financial distress of the state government. “All the views of the high cost renewable power sellers are being heard fairly and transparently,” he said.
Mr Kallam called this decision as part of Mr Reddy’s commitment to cleanse the system. He refused to comment on the previous government but ridiculed the need for entering into PPAs, by paying exorbitant prices for wind and solar power, when thermal energy was available.
He said that reviewing the PPAs will not scare away investors. “We have many people willing to provide solar power at cheaper rates without any PPA. Some vested interests seem to have been making such propaganda which made investors step back,” Mr Kallam said. He added that the state government will reply to the letter written by the Union minister.
Mr Kallam said that there was loss due to gas allocation to Spectrum and Lanco. “The previous government purchased power at high cost from Spectrum and Lanco even though their PPAs expired in 2016. It did not state the facts seeking reallocation of the gas to GMR which had a long term PPA, up to 2029, at a lower price. They entered into a short term PPA at a higher rate with Lanco and Spectrum after their PPAs lapsed.”
