The ongoing tussle between the YSR Congress party government in Andhra Pradesh headed by Y S Jagan Mohan Reddy and Central government over power purchase agreements (PPAs) signed with solar and wind power companies seems to snowballing into a big fight.
On Tuesday, the Jagan government challenged the Union power ministry through Power System Operation Corporation Limited in the high court for issuing an order asking the state power distribution companies (Discoms) to open letter of credits (LCs) in favour of solar and wind power companies.
The Centre threatened that if the Discoms do not issue LCs to wind and solar power plants by October 15, they would be stopped from purchasing power from power exchange under short term open access with effect from October 16.
Issuing of LCs to wind and solar power companies would mean Discoms should clear their bills for the power they supply within 45 days, failing which they would use these LCs to draw money. In a way, these LCs mean giving post-dated cheques to the companies.
On behalf of the state government, Discoms filed a writ petition in the high court challenging these orders. They argued that opening of LCs as a condition of PPA was waived by the parties. The central government as a third party could not interfere in the contract conditions of PPA, they pointed out.
They also challenged the Centre’s threat to prevent them from drawing power from the power exchanged under open access, stating that it had no such powers.
It remains to be seen where this confrontation between the state and the centre lead to.
