The adverse effect of the cancellation of the power purchase agreements signed by YS Jaganmohan Reddy’s government immediately after he assumed power has led to the collapse of the power companies. If the proposed 750 MW solar power projects in the Kadapa Solar Park had been continued, the additional burden of Rs. 2775 crore would not have been on the people.
The Jagan government cancelled the agreements signed during the previous TDP government. After court cases and hearings on this, it decided to sign PPAs in a hurry a few months before the 2024 elections. As a result of the four and a half years of delay, it has become necessary to bear the burden of new taxes imposed by the Center on solar projects.
As per the agreement, the proposed solar power projects in Kadapa should be completed by June 2020. It was estimated that 15,000 MU of current will be generated per year at an average rate of 2 million units per megawatt. The Centre has waived off Basic Custom Duty (BCD) on solar panels purchased for solar power projects as of the date of the agreement.
The order will be in effect till March 2023, after which 40 percent BCD will have to be paid on imported solar panels. This is estimated to be an additional burden of 40 paise per unit. The central government has increased the GST on solar panel purchases from 5 to 12 percent, which will result in an additional burden of 12 paise per unit.
Currently, a solar power unit is available in the open market at Rs 2.50 per unit. But since the YSRCP government took the then price of Rs 2.77 per unit, an additional burden of 22 paise per unit will be incurred. In total, the agreement with the plants to be set up in Kadapa will result in a burden of 74 paise per unit.
An additional burden of Rs 111 crore has arisen for the 150 MUs purchased annually. Over the 25 years of the PSA period, that amount will be Rs. 2775 crore. The coalition government has to implement it, even if it is a burden.
