India Asks States to Rethink Decision on Redrawing Contracts
(Bloomberg) -- India's federal government is asking provinces that are renegotiating contracts to reconsider their decision, as states backtrack from existing renewable power purchase pacts.
“We are mindful of the difficulties being faced by investors in some instances where the state government is trying to renegotiate some of the executed contracts,” India's federal oil minister Dharmendra Pradhan said Friday at a BloombergNEF Summit in New Delhi. “Our government has requested state governments to reconsider their decision, as this will jeopardize future investment in not only the concerned state but also the country as a whole.”
India's Andhra Pradesh state has asked renewable power producers to cut tariffs and disregard existing contracts, people with knowledge of the matter said last month. That resulted in ratings downgrades for renewable energy companies with projects in the southern state.
Renegotiating prices could adversely impact Prime Minister Narendra Modi's goal of installing 175 gigawatts of renewable capacity by 2022 in the South Asian nation, which has awarded some of the world's lowest green energy tariffs.
Pradhan said the country is seeking investments for its growing energy sector including in exploration, city gas projects and renewables, as it aims to become a $5 trillion economy that extends affordable energy to its 1.3 billion people. That would require foreign investment, he said.
”Investments are not for charity, investments are for profit,” he said at the summit. Investors “should come to my market. It's a huge market and their investment should be respected and secured.”
--With assistance from Rajesh Kumar Singh.
To contact the reporters on this story: Debjit Chakraborty in New Delhi at dchakrabor10@bloomberg.net;Anindya Upadhyay in New Delhi at aupadhyay22@bloomberg.net
To contact the editors responsible for this story: Serene Cheong at scheong20@bloomberg.net, ;Ramsey Al-Rikabi at ralrikabi@bloomberg.net, Alpana Sarma
©2019 Bloomberg L.P.
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