Andhra High Court Asks DISCOMs to Clear Dues of Wind Developers in Two Weeks

The Andhra Pradesh High Court has asked the state’s distribution companies including, Southern Power Distribution Company Limited (APSPDCL) and Eastern Power Distribution Company Limited (APEPDCL), to clear the dues of wind developers within two weeks. The dues currently amount to a whopping ₹1.7 billion (~$24.3 million).

The high court asked the DISCOMs to reply to every petitioner in the case within two weeks.

The next date of hearing is March 12, 2020.

A senior high court lawyer told Mercom, “The high court has asked the DISCOMs to either pay or be ready to face action.”


Further, the court has also asked the DISCOMs to reply to the Andhra Pradesh State Load Dispatch Center that countered against the Power System Operation Corporation Limited’s (POSOCO) appointment to look into the reasons behind the curtailment of renewable energy in the state due to it being an independent central agency. APSLDC had also alleged that POSOCO had adopted an “adversarial stand” in the petition filed by it before the Central Electricity Authority (CEA).

Background

In February 2020, several wind developers had filed an affidavit stating that they have not been paid in line with the Andhra Pradesh High Court order by the state DISCOMs. The petitioners had requested the high court to direct APSDCL to make immediate payment of the outstanding dues amounting to ₹1.7 billion (~$0.023 billion) along with accrued interest.

The petition further said that the payment of ₹621.8 million (~$8.68 million) for 180.83 million units (MUs) was withheld without any justification and information. An amount of ₹448.1 million (~$6.26 million) was also withheld for the period between February 2017 to July 2018.

Due to the delay in payments, the petitioners claimed interest as per the power purchase agreement (PPA) on the outstanding amount of ₹530.9 million (~$7.41 million).

Meanwhile, the DISCOMs have paid dues up to September 2019 but have not continued to pay monthly as directed by the high court which amounts to ₹138.9 million (~$1.94 million).

Earlier, Mercom reported that considering the situation of the distribution companies in the state, and the fact that developers require liquidity to keep their projects running, the Andhra Pradesh High Court at Amravati in December 2019, had directed the state DISCOMs to immediately clear the dues of solar and wind developers within a month.

According to the court’s order, the DISCOMs were directed to pay ₹2.43 (~$0.0341)/kWh and ₹2.44 (~$0.0343)/kWh to wind and solar developers respectively.

Later, the affidavit filed by DISCOMs stated that as of August 2019, the power utilities of Andhra Pradesh had a debt of ₹600 million ($8.5 million). However, after the order of the court, some of the pending bills were discharged by raising loans.

In January 2020, it was reported that solar and wind power developers in Andhra Pradesh had begun to receive part of their dues.

According to Mercom’s India Solar Project Tracker, Andhra Pradesh accounts for 3.4 GW of large-scale solar projects in operations, and approximately 1.7 GW of projects are under the development pipeline. According to the Ministry of New and Renewable Energy, the state has 4.1 GW of wind power capacity (as of October 2019).

The issues in Andhra Pradesh continue to dent investor sentiment in the state and the sector. The longer the litigation drags on in the state, the harder it will become for the industry to get back on the growth path.