Watch | Feedback Infra's Vinayak Chatterjee on woes of renewable energy firms
States forcing renewable energy firms to lower tariffs or cancelling power purchase agreements are contractual violations that call for serious action from regulators, said Vinayak Chatterjee, chairman of Feedback Infra Pvt. Ltd.
“States are using a variety of arm-twisting tactics to force renewable (and sometimes even thermal) energy suppliers to reduce their tariffs and going to the extent of unilateral cancellation of contracts in favour of cheaper deals that come by later,” Chatterjee told BloombergQuint in an interaction.
The regulators concerned, he said, should hold states accountable for terminating deals that renewable energy players win through transparent bidding. That's because, the problem, according to Chatterjee, stems from a buyer monopoly.
There are a large number of competitive suppliers and with only one buyer—the state government—the role of an independent regulator is crucial to maintaining probity and integrity, Chatterjee said. “The independence of the regulator is in serious question.”
Andhra Pradesh decided to pull the plug on various wind and solar PPAs in July, saying they were straining state power distribution companies after it unsuccessfully tried to lower contractually agreed tariffs.
The cancellation of contracts, despite the central government's warnings, has hurt investor sentiment, said Chatterjee. “This kind of behaviour is just not acceptable.”
The regulators should play a neutral role and aim to protect the legitimate interests of all players in the system and hold them to account, he said. “The billion-dollar question is, what are the independent regulators doing?”
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