IOC joins NTPC, SECI, private energy firms against AP’s stance to cut renewable energy tariffs

Source: livemint.com

Mumbai: Public sector oil marketer Indian Oil Corporation (IOC) has joined ranks with the National Thermal Power Corporation (NTPC) and the Solar Energy Corporation of India (SECI) in turning down the Andhra Pradesh’s request for a tariff revision in wind power supplied to the state.

In letter last week to the Andhra Pradesh Southern Power Distribution Co Ltd (APSPDCL), IOC declined the state’s request to cut the tariff payable to it from ₹4.7 as per the power purchase agreement to ₹2.43 a unit.

APSPDCL, one of the power distribution utilities in the state, had written to the IOC asking it to revise its power bills submitted to the utility applying the revised lower tariff. In its reply to the state, IOC said that the current wind tariffs are not comparable to those prevailing at the time the company had set up its wind farms.

“A considerable amount of money is spent for the operation and maintenance of the windmills. This expenditure increases due to ageing windmills,” the company said.

IOC also said that the state does not have the power to unilaterally alter or cancel PPAs, both of which it appears APSPDCL had threatened. Indian Oil reiterated that the utility continues to owe it ₹23.35 crore for unpaid bills, and interest, is pending from August 2018 to May 2019.

Andhra Pradesh has been in the forefront among states in setting up green power with commissioned capacity of 7.2 gigawatts, with solar at 3.2GW and wind at over 3.9GW. On 1 July, the state directed a high-level negotiation committee to use current tariff rates, rates prevalent at the time of commissioning of projects, and the current opportunity cost of other sources of power to benchmark and renegotiate agreements, and submit a report in 45 days. Last Thursday, clean energy firms got a stay from the Andhra Pradesh High Court on the state’s unilateral move to change power tariffswith private developers.

Solar Energy Corp. of India Ltd, the intermediary between state discoms and private developers, and NTPC Ltd, have both denied Andhra Pradesh’s request for renegotiation, with the latter threatening legal action if outstanding dues at the original tariffs aren’t paid.

However, Mercom reported on 26 July that since issuing the directive, the state has started curtailing the quantity of wind power it is purchasing from private developers, despite the renewable energy sector having “must-run” status in the state.