In what can be the first major shock to YS Jagan Mohan Reddy government from the Centre, Union New and Renewable Energy secretary Anand Kumar has shot off a letter to the AP Chief Secretary LV Subramanyam over AP CM's decision to "revisit" renewable Power Purchase Agreements PPAs. In the letter, the union government has advised Jagan-led AP government to resist from his move to revisit PPAs in the renewable energy sector. The union government opined that "such steps" would send wrong signals to investors and would "affect" the investor confidence and the country's renewable energy targets.
Anand Kumar said to have opined "serious concerns" over Jagan's plans that were reported in media. The letter of secretary of Union New and Renewable energy Anand Kumar has come just days after Jagan's government ordered to cancel all the Infrastructure Contracts awarded by previous Chandrababu Naidu government i.e before April 1, 2019. It is estimated that over Rs 50,000 crore worth contracts have been stalled.
It can be noted that Jagan has assured to review all the PPAs particularly Wind and Solar made by previous Chandrababu government. Jagan cited "corrupt practices" by previous government and even stated that tenders would be reviewed in irrigation projects.
This decision of Jagan had raised alarming concerns from various national banks over the possibility of increase in NPAs (non-performing assets). Dozens of banks raised concerns that this could lead to growing NPAs. It can be recalled that similar situation had arised after YS Rajasekhar Reddy met with a tragic accident. Several irrigation projects, contracts were either halted or changed or delayed payments causing a great loss.
In his letter to AP CS, Anand Kumar wrote, "revisiting PPAs shake the confidence of the investors in the sector and adversely affect the future bids and investment in the state and the country." He further added, "a contractual agreement once signed should not be revisited unless there is a specific provision to do so in the agreement or a case of conspiracy and undue gains is proved."
Anand Kumar further stated that the government of India has set a target of installing 175GW of renewable energy capacity by 2022, of which 100GW would come from solar, 60GW from wind, 10GW from biomass, and 5GW from small hydro projects.