Solar Developers Seek Center's Help for Payment Release by Andhra DISCOMs

The National Solar Energy Federation of India (NSEFI) has requested the Union Power Minister, R.K. Singh, for the release of payments by the Power Finance Corporation (PFC) and REC Limited to renewable energy developers having power purchase agreements (PPAs) with Andhra Pradesh distribution companies (DISCOMs).

In its letter, NSEFI said that the Andhra Pradesh government had requested PFC and REC to disburse an additional loan to the state for repayment to renewable developers. The disbursal has been pending due to which developers are yet to receive payments since April 2020.

NSEFI had also written to the High Court of Andhra Pradesh urging them to expedite pending hearings of renewable projects developers about issues of payment of outstanding invoices. “The Indian banking system is at the risk of suffering NPAs to the tune of ₹150 billion (~$2.04 billion) to ₹180 billion (~$2.4 billion) due to this delay,” they had warned.

In September 2019, the Andhra Pradesh High Court had directed the DISCOMs to pay an interim tariff of ₹2.43 (~$0.032)/kWh and ₹2.44 (~$0.033)/kWh to wind and solar developers, respectively, to help them maintain liquidity.

Subrahmanyam Pulipaka, the chief executive officer of NSEFI, said that the interim tariff provided only some relief to the project developers, but that was not enough to take care of their debt.

“We would also like to bring to your attention that our members have not been paid full tariff as agreed under the PPA for the electricity supplied since August 2018. The payments were received at less than 50% of the agreed tariff from almost two years, and that too with a delay of almost a year,” he said.

In July this year, NSEFI had requested the Union Power Minister to set aside ₹50 billion (~$666.2 million) from the DISCOMs liquidity package for Andhra Pradesh DISCOMs so they could clear their dues to renewable generators.

In May this year, the central government announced that DISCOMs would receive ₹900 billion (~$12.03 billion) as part of a stimulus package to help the Indian economy recover from the COVID-19 crisis. This one-time liquidity injection was to be infused into PFC and REC in two equal installments. The Finance Minister, Nirmala Sitaraman, had said loans would be given against state guarantees solely for clearing liabilities to power generating companies.

Earlier this year, the Government of Andhra Pradesh had provided a state-backed guarantee for DISCOMs to secure a ₹66 billion (~$873.4 million) loan from PFC and REC.

In its letter, NSEFI said non-payment of the interim tariff as directed by the High Court had caused severe financial distress to the developers.

Previously, Mercom reported that NSEFI had in a letter to RK Singh said projects in Andhra Pradesh were suffering due to rampant curtailment of solar generation since July 2019.

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 development stages.