India to Honour Commitments Under Various Energy Agreements: Nirmala Sitharaman

Nirmala Sitharaman has assured investors that India will honour all its contractual agreements under various energy agreements.

Finance Minister Nirmala Sitharaman while speaking at an event has assured investors that India will honour all its contractual agreements under various energy agreements.

“Commitments shall be honoured and investors should not have any concern,” the minister said at the India Energy Forum of CERAWeek.

The comments by the minister are closely related to the ongoing tariff renegotiations in Andhra Pradesh for all the renewable wind and solar power purchase agreements that were signed under the previous regime.

The state government had also asked government nodal agencies Solar Energy Corporation of India (SECI) and NTPC to lower tariff of renewable energy projects auctioned by them under concluded PPAs.

Following which the newly elected government had decided to curtail renewable power generation in the state after the state High Court put a stay on the government’s order to renegotiate tariff agreements for renewable projects.

According to sources the decision to curtail the generation in the first two days had led to a loss in power generation to the tune of 50 GWh for the states’ RE operators, with losses increasing exponentially. Following which they had approached the Ministry of New and Renewable Energy (MNRE) to direct the state government to stop the curtailment.

In response to this, the minister had issued an industry-wide letter asking all states to ensure that the “must-run” status of renewable energy plants under the national grid code must be honoured and followed, and has said that if supply from these units is curtailed, the reason must be given in writing to generating companies.

The investors’ sentiment was affected due to this, especially in the renewable energy sector.

Sitharaman further said that the atmosphere to invest will be friendly, and added that tax incidence has been lowered without adding any “ifs and buts”. She said, amendments are being made to Companies Act so it doesn’t look punitive, and added that course of deep reforms will continue.