With the Andhra Pradesh government mulling a review of the power purchase agreement between the state discom and the Solar Energy Corporation of India for supply of power by Adani Green, Banasree Purkayastha looks at the options available with it, and what would happen if the deal is cancelled
What are the issues with the agreement?
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The N Chandrababu Naidu-led TDP government in Andhra Pradesh is examining whether the state can cancel the power purchase agreement (PPA) between the Solar Energy Corp of India (SECI) and the state discom. This follows allegations by the US Securities Exchange Commission (SEC) that the Adani Group paid around $265 million in bribes to officials in several states, including Andhra Pradesh, to secure solar power contracts. Per the Hindu BusinessLine, the state Cabinet is likely to discuss the status of the PPA at it meeting today (December 3) and review the options before the government. State finance minister Payyavula Keshav had earlier told Reuters that the government was “digging into all the internal files” from the previous YS Jagan Mohan Reddy-led YSRCP administration, under which the alleged misconduct took place. “We will also examine what can be done next, like is there a possibility to cancel the contract … state government is looking into this issue closely,” Keshav said. The US SEC has alleged that the bulk of the bribes was paid to Andhra Pradesh officials when it was governed by the previous government.
What were the terms of the PPA?
In December 2021, the Andhra Pradesh government had signed a PPA to procure 7,000 MW of solar power through SECI at Rs 2.49 per kWh for 25 years in a phased manner. Adani Green was contracted to supply an initial 3,000 MW renewable energy to the state discom starting September 2024, another 3,000 MW in FY25-26, and 1,000 MW in FY26-27. The Andhra Pradesh Electricity Regulatory Commission had approved the procurement plan in November 2021, during the tenure of former chief minister Jagan Reddy. The twist in the tale is that Adani Green has not yet commenced supply to Andhra due to alleged delays by the Central Transmission Utility of India in setting up transmission infrastructure but is selling power from the same project on power exchanges at Rs 3.5 per unit,
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