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Informist, Wednesday, Nov. 27, 2024

 

--Andhra minister: Unlikely to scrap power pacts linked to Adani group

--Andhra minister: Must see outcome if power pacts linked to Adani scrapped

--Source: Andhra penalty INR 30 bln if power pacts linked to Adani scrapped

 

By Narayana Krishna

 

HYDERABAD - Worried about the financial implications and legal consequences, the Andhra Pradesh government is unlikely to scrap or suspend power purchase agreements linked to Adani Group entities in a hurry, a senior minister of the state cabinet told Informist. "We have to consider the legal and financial consequences too before thinking about cancellation of the agreements," state finance minister Payyavula Keshav said, declining to comment further, as the matter is sub judice. "We have to see all aspects of the issue before deciding anything. We are watching," he said.

 

In December 2021, the Andhra Pradesh government signed power purchase agreements with public sector Solar Energy Corp. of India Ltd. to buy up to 7,000 megawatts of solar energy for 25 years in a phased manner. As per the agreement, Solar Energy Corp. was to procure the solar power from Adani Group companies.

 

The total deal size, after completion of the contract period of 25 years, and subject to fulfilment of committed capacity supply, was estimated at INR 1.05 trillion, an official with the state's energy department said. Andhra Pradesh had agreed to pay INR 2.49 per unit to Solar Energy Corp., which worked out to INR 42.33 billion a year, the official said. While Solar Energy Corp. would retain 7 paise as trade margin, INR 2.42 would go to power Adani group companies for each unit they supply to state electricity distribution companies, the official said.

 

Telugu Desam Party's senior leader and now state minister Keshav, who was chairman of the state's Public Accounts Committee then, had challenged the agreements in the Andhra Pradesh High Court. The case is still pending with the court.

 

Refuting media reports quoting him as saying that the Andhra Pradesh government is likely to suspend the power purchase agreements with the Adani Group, he said that since he was the petitioner, the matter is sub judice, and cannot comment further. He said that considering the nature of the pact, it has a huge financial bearing on the state exchequer, and the government has to think carefully before taking any decision.

 

Expressing a similar view, a top official of the state energy department said that if the government cancels the power purchase agreements, it will have to shell out nearly INR 30 billion as compensation or penalties to Solar Energy Corp. "The agreements were not made directly with any of the Adani Group companies. As a nodal agency, SEC (Solar Energy Corp.) has commitments with solar power producers and supplies to state distribution companies. Adani group companies are not in direct deals with any of the state utilities," the official said.

 

Following the US indictment alleging that the Adani Group paid bribes of up to $265 million to Indian officials to secure the power purchase agreements, speculation is high that the Andhra Pradesh government may cancel the pacts. Between 2021 and 2022, the Adani group got contracts from Solar Energy Corp. for supplying solar power to states including Odisha, Tamil Nadu, Chhattisgarh, and Andhra Pradesh.

 

The supply of solar energy is yet to start as the agreements have to be cleared by the Central Electricity Regulatory Commission, the official said.

 

During 2019, the Y.S. Jagan Mohan Reddy-led government in Andhra Pradesh terminated the solar and wind power contracts signed by the N. Chandrababu Naidu government. After a court battle led by the National Solar Energy Federation of India, the state government paid nearly INR 60 billion as penalty and INR 30 billion as interest to the renewable energy producers, the official said.  End

 

Edited by Ashish Shirke

 

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