India State to Renegotiate Renewable Pacts Citing High Rates
(Bloomberg) -- India’s southern state of Andhra Pradesh will renegotiate some power purchase agreements for renewable projects to improve the finances of its electricity retailers.
The state’s distribution companies, or discoms, owe 200 billion rupees ($2.9 billion) to generators mainly because of “abnormally priced” wind and solar power purchase agreements, according to a July 1 document posted on the state government’s website.
“In order to ensure that consumers are provided with affordable power and discoms are pulled out of the financial distress there is a need to review and renegotiate the exorbitantly priced wind and solar power purchase agreements,” the document said.
The federal Ministry of New and Renewable Energy had written a letter to seven states in August 2017 asking them not to renegotiate contracts and that instruction remains unchanged, Secretary Anand Kumar said by phone.
Andhra Pradesh had 7.7 gigawatts of installed renewable and 14.6 gigawatts of fossil-fuel power capacity at the end of May, government data shows. It has created a nine-member committee to complete the negotiations and submit a report to the government in 45 days, it said. It didn’t identify who the contracts are with or the price the discoms are paying.
“We’re a rule-of-law country and we can’t sign a contract and then back off as it affects future projects,” Shekhar Dutt, director general of industry body Solar Power Developers Association, said by phone.
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