Andhra High Court’s Order to Quash the 6.4 GW Solar Tender Suspended

The larger bench headed by the Chief Justice of the High Court of Andhra Pradesh has suspended the earlier order passed by the single-judge bench quashing the request for selection (RfS) and the draft power purchase agreements (PPAs) issued by the Andhra Pradesh Green Energy Corporation Limited (APGECL) for 6.4 GW of solar projects, according to a legal source.

The matter has been posted for further hearing on August 16, 2021.

Earlier, in June this year, the High Court of Andhra Pradesh had upheld the petition filed by Tata Power Energy Limited and had quashed the RfS and the draft PPAs issued by the Andhra Pradesh Green Energy Corporation. The suspension order issued now implies that the auction is still active though the PPAs may not be signed until the matter is completely settled.

Background


In December last year, the Andhra Pradesh Green Energy Corporation Limited (APGECL) had invited bids for developing 6.4 GW of solar power projects at ten locations in the state.

The total capacity of 6.4 GW included 600 MW of solar projects to be developed at Chakrayapet, 400 MW at Thondur, 600 MW at Kambaldinne, 600 MW at Pendlimarri, 600 MW at Rudrasamudram, 600 MW at CS Puram, 600 MW at Uruchinatala, 1,200 MW at Akmbadur, 600 MW at Mudigubba, and 600 MW at Kolimigundala.

The auction held in February had resulted in tariffs ranging between ₹2.47 (~$0.033)/kWh and ₹2.58 (~$0.035)/kWh. The auction winners included Adani Renewable Energy, HES Infra, NTPC, Shirdi Sai Electricals, and Torrent Power.

The state government had planned to install 10 GW to ensure nine hours of daytime free power supply to the agriculture sector on a sustainable basis. The program was proposed in February 2020 and approved in June of the same year.

But on January 6, Tata Power Renewable Energy filed an appeal at the Andhra High Court to stop the further process on APGECL’s RfS and PPAs. Tata Power had stated that the RfS and the draft PPAs were not in line with the Electricity Act’s provisions and the guidelines for tariff-based competitive bidding for power procurement from grid-connected solar power projects.

It cited a clause in the draft PPA that sought to oust the Andhra Pradesh Electricity Regulatory Commission’s statutory powers and jurisdiction. It also noted that APEGECL deviated from competitive bidding guidelines without getting the Commission’s approval.

In its appeal, Tata Power had said that the dispute resolution mechanism provisions in the draft PPAs proposed to vest the power to arbitrate disputes with bureaucrats, which was a violation of the provisions of the Electricity Act. It explained that this would result in bidders questioning the fairness of the dispute resolution mechanism and discourage bidder participation. Tata Power also noted that APGECL was neither a generator nor a licensee and does not have the authority to issue RfS or draft PPAs as per the Electricity Act.

On January 8, the High Court had upheld TPREL’s contention that APGECL’s RfS and draft PPAs for 6.4 GW of solar projects were in gross violation of the provisions of the law. The state High Court directed APGECL not to enter into any agreements for its tender for 6.4 GW of solar projects until further notice in response to TPREL’s appeal.

Later on June 17, the court quashed the RfS and the draft PPAs issued by APGECL for 6.4 GW of solar projects. The court had directed the Andhra Pradesh government that to procure power; the bidding documents should be per the Electricity Act, 2003. The court further noted that any deviation from the bidding guidelines issued by the Ministry of Power and the Ministry of New and Renewable Energy (MNRE) should be approved by the Andhra Pradesh Electricity Regulatory Commission (APERC).

According to Mercom’s India Solar Project Tracker, Andhra Pradesh currently has 3.7 GW of large-scale solar projects in operation, while around 1.3 GW of projects is under different stages of development.

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