Andhra govt awaits central funds to clear dues of power projects

The Andhra Pradesh (AP) government has clarified to the state high court that it will be able to clear the dues of power projects only when “the Centre provides funds”.

Apart from that, the state government has refused to roll back its policy on cancellation of renewable power projects.

The AP government has written a fresh letter to the Centre reiterating its demand for a ‘long-term solution to renewable integration cost’, a week after the Centre's committee offered to extend certain financial relaxations to the state at its first meeting held on November 7.

“We have not yet received the reply to our letter on the question of gap funding,” a government spokesman said while hinting that the whole issue hinges on it.

The Central government, in a meeting with the state earlier this month, had asked it to clear dues of firms supplying power to the state. The arrears of renewable and thermal power projects total more than Rs 18,000 crore in the past 16-18 months. 

“In order to address the financial situation in Andhra Pradesh, efforts will be made to provide loans at an attractive rate, lower than risk level of AP through REC, PFC and IREDA. It will be for clearing the dues of power purchase against state sovereign guarantee or pledging assets,” a Central government representative had said in a meeting on November 7. 

The state government, in an ongoing case on payment dues, said that after the arrangement of financial assistance, the state will resolve the payment of pending bills. 

Sources in the state government said chief minister Y S Jaganmohan Reddy has not agreed to any compromise on the renewable power contracts. The state decided to cancel these contracts in July, citing wrongful bidding and high rates.

“The Centre merely suggested to the state to honour power purchase contracts. But the state has not yet agreed to it and the legal tussle remains,” said a state government official. 

The YSR Congress government in Andhra Pradesh formed a high-level negotiations committee (HLNC) in July to “review, negotiate and bring down” the tariff of all renewable power projects that had been given out by the previous Telugu Desam Party government.

It cited poor financial health of its discoms for the revision. As the companies protested against this decision, the state government curtailed the purchase of renewable power.

Renewable power project developers in the state moved Andhra Pradesh High Court, which ruled in favour of these companies. In an order on September 24, the court dismissed the HLNC. Despite this, the state continued to curtail power purchase from renewable projects. The government has filed a review petition before the high court against the earlier order. 

The renewable power project developers also moved AP Electricity Regulatory Commission (APERC) against the government which will decide on the tariff of these plants.

Amid all this, payment to project developers is also stuck for over a year now. Total dues of states to renewable power projects was Rs 11,000 crore by the end of July, of which AP has the lion’s share of Rs 2,500 crore.

Power Woes

• The Andhra Pradesh govt refused to roll back policy on cancellation of renewable power projects

• Total dues of states to renewable power projects was Rs 11,000 crore by July 2019

• Of this, Andhra Pradesh has the lion’s share of Rs 2,500 crore