Centre takes dim view of Jagan Mohan Reddy’s plan to tweak power tariffs, PPAs

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Hyderabad: Reacting to Andhra Pradesh Chief Minister YS Jagan Mohan Reddy ’s decision to cancel power purchase agreements in renewable energy sector and renegotiate tariffs, Union renewable energy minister RK Singh has warned this would impact foreign investment flows into the sector. Ahead of a scheduled meeting of the Andhra government with renewable energy developers on Monday, the minister said, “Power purchase agreements are contracts binding on all the signatories. If the contracts are not honoured, investments will stop coming.” Singh said the tariffs were fixed by the independent electricity regulators after due process of public hearings and examining all input costs. “If an impression goes out that the rule of law does not prevail or that contracts are not honoured, then the investments will dry up and growth will come to a halt. We have to move in a manner which is fair and transparent and according to the law. If we do not so, the investment process and development will come to a halt.” The Jagan Mohan Reddy government had decided to cancel the PPAs and ordered that tariffs be renegotiated as it said the tariffs fixed in Andhra during the regime of N Chandrababu Naidu were higher than some of the other states, with a possibility of irregularities and corruption. “It will be wrong and against the law to cancel all the PPAs,” said the Union minister, adding that “The tariff for solar and wind generation in different states will be different depending upon the solar insolation for solar energy and the CUF/wind speeds for wind energy.”