Solar industry asks President to withhold assent to Punjab PPA revision bill

The bill was introduced and passed in the Punjab state assembly on November 11, and is said to have referred to the President of India for his final assent.

The solar industry has requested President Ram Nath Kovind’s office to withhold assent to the Punjab renewable energy security, reform, termination and redetermination of power tariff bill, 2021, which aims to revise the tariffs of renewable energy plants located in the state. The bill was introduced and passed in the Punjab state assembly on November 11, and is said to have referred to the President of India for his final assent.

Questioning the constitutionality validity of the bill — which the industry claims conflicts with some provisions of the Electricity Act, 2003 — the National Solar Energy Federation of India (NSEFI) has written to the President’s office requesting not to grant assent to it. Through NSEFI’s letter, reviewed by FE, the industry also demanded a wider discussion on this issue with stakeholders.

Fearing a repetition of the 2019 event when Andhra Pradesh had unilaterally revised power purchase agreements (PPAs) to reduce renewable energy tariffs, solar and wind developers had earlier written to the Punjab government requesting it not to take any action which would lead to the revision of contractually agreed electricity tariffs. The move can impact around 1,000 MW of solar generation capacities, including assets owned by firms such as Azure Power, Adani Green and Acme Solar, which had signed PPAs with the state between 2013 and 2016.

Analysts at Fitch Ratings had said earlier that “any attempt by a state government to renegotiate tariffs in its power purchase agreements will be unsuccessful and that such a move would deter private investment and derail the central government’s target of increasing renewable capacity in India to 500 giga-watt by 2030”.

The state assembly had also passed the Punjab energy security, reform, termination and redetermination of power tariff Bill, 2021, which intends to revise the terms of the PPAs between the state and L&T’s 1,400 MW Nabha plant and Vedanta’s subsidiary Talwandi Sabo Power, which runs the 1,980 MW station. Stating that such a move could jeopardise investments worth Rs 27,000 crore in the state, the Association of Power Producers had earlier requested Punjab’s Governor Banwarilal Purohit to refuse to grant assent to the bill.

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