Discoms’ altering PPAs is bad move for power sector, says ICRA


Discoms’ altering PPAs is bad move for power sector, says ICRA

Attempts by state power distribution companies (discoms) to renegotiate power purchase agreements (PPAs) will bode poorly for investors in the sector, a report by credit ratings agency ICRA has said. The report was in context of the Andhra Pradesh state government constituting a high-level committee to review, negotiate and bring down the cost of wind and solar PPAs tied-up by the discoms.

The state government has attributed the high-cost wind and solar power PPAs to the large power purchase dues from the discoms to the power generators, and thus has recommended reviewing the high cost wind and solar agreements and to negotiate and bring down the prices of wind and solar power PPAs.

Commenting on the state’s move, Sabyasachi Majumdar, Group Head – Corporate ratings, ICRA Ltd, said: “In our view, the PPAs are contractual documents, and unilaterally modifying the same is likely to be subjected to legal challenges. Read More

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