While the YSR Congress party government in Andhra Pradesh is hell bent on reviewing the power purchase agreements entered into by the previous Telugu Desam Party government headed by N Chandrababu Naidu in order to expose the latter’s corruption, the NDA government at the Centre is going all out to mount pressure on Jagan to stop the reviews.
Apart from writing letters to Jagan to stall the exercise of reviewing the PPAs and forcing the central agencies to boycott the meetings of the cabinet sub-committee, the Centre is also bringing pressure on the Andhra chief minister through national and international credit rating companies.
On Tuesday, ratings agency CRISIL warned that the Jagan’s controversial plan to reopen power purchase agreements could bring 5.2 giga watts (GW) solar and wind energy projects with an estimated debt exposure of over ₹21,000 crore under stress.
The agency also said Jagan’s decision has also caused a worry in the investors and might aggravate the problem of delayed payments from distribution companies (discoms) and added that around ₹10,600 crore may be at an immediate risk of default.
“People have faith in the Indian legal system and that is why we don’t see that this would affect our future bids. Indian renewable energy sector is supported by investments from across the globe. Our stand is very clear. Any legal contract that has followed the due process can’t be negated unless a malafide or corruption case is established," the agency said.
The Modi government is going all out to impress upon the Jagan government not to cancel the previous TDP government’s decision to ink PPAs for the projects in the so called “in- pipeline," as it would have a wide ranging impact on foreign investments.
“The AP order, issued on July 1, 2019, directs a high-level negotiation committee to use current rates, rates prevalent at the time of commissioning of projects, and the current opportunity cost of other sources of power to benchmark and renegotiate agreements, and also submit its report to the state in 45 days," the CRISIL report said.
“A quick resolution here is also necessary to prevent vitiating of investor confidence in the sector," the CRISIL report said.