Renewable energy firms may take Andhra Pradesh's power distribution companies to the National Company Law Tribunal over non-payment of dues, Power Minister RK Singh has said.
In a letter to Andhra Pradesh Chief Minister YS Jagan Mohan Reddy, the Union Minister for Power and New and Renewable Energy said state discoms owe Rs 2,000 crore to various renewable energy firms. BloombergQuint has reviewed a copy of the letter.
“It is likely that many of these renewable energy power producers would default in making payment to Indian Renewable Energy Development Agency Ltd. and other financial institutions,” the letter said. “Any default would make them non-performing assets.”
State-run IREDA extends financial assistance to renewable energy projects. India has set a target to produce 175 gigawatt of renewable energy by 2022 as it looks to cut carbon emissions to meet commitments under the Paris Agreement.
The Andhra Pradesh government, according to the letter, owes Rs 243 crore to state-owned Solar Energy Corporation of India. Singh urged Reddy to instruct discoms to make payments of outstanding dues to all renewable energy producers and SECI within the next few days.
The Andhra Pradesh government had earlier cited higher tariffs of wind and solar power purchase agreements and financial crisis at discoms with dues amounting to nearly Rs 20,000 crore as reasons to review the “exorbitantly priced wind and solar power purchase agreements”. It, however, clarified that only those power purchase agreements where there's “manifest wrongdoing” will be opened.
According to Acuité Ratings & Research, a debt exposure of around Rs 9,000 crore will be at potential risk if the state cuts tariffs on operational projects to bring it to current auction levels.
“It will not only impact the investment pipeline of Rs 60,000 crore in renewable energy projects in the state over the next 3-5 years but will also send a wrong signal to the investor community regarding the sustainability of renewable projects in India,” the credit rating and research company had said in a press statement.
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