The Andhra Pradesh (AP) government’s latest move to review and bring down the purchase cost of wind and solar energy could aggravate the problem of delayed payments from distribution companies (discoms) and bring under stress about 5.2 gigawatt (GW) of renewable projects with debt of over Rs 21,000 crore.
Nearly half of this capacity is at higher risk of default since they lack liquidity support beyond project level. The AP government’s order, issued on July 1, 2019, directs a high-level negotiation committee to use current 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 also submit its report to the state in 45 days. Read More
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