Andhra Pradesh Cabinet likely to discuss Adani Green power supply pact on December 3

Andhra Pradesh is in a cleft stick with regard to electricity supply from the Adani Green Energy project that is now in some controversy. Sources told businessline that the State Cabinet is likely to discuss the status of the power supply agreement between the State discom and the Solar Energy Corporation of India, in its next meeting expected on December 3.

If  Andhra decides to cancel the project, it will end up paying a substantial amount for 25 years – it being a 25-year contract – sources said, estimating the amount to be paid as anywhere close to ₹2,800 crore annually.

If it accepts the projects then the end user, the retail consumers, will have to pay extra 80 paise to ₹1 for the power bought. This is because geographical network access component will be applicable now. When the PSA was initiated, inter-State transmission charges were there, but with this project SECI has waiver on that. There will also be transmission losses.

Adani Green has contracted to supply an initial 3 GW renewable energy to the state discom, another 3 GW in 2025, and 1 GW in 2026.

On Friday, 29 Nov, Adani Group Chief Financial Officer Jugeshinder Singh said if the project were cancelled, it would be the State that would be the loser and not the company. Under the terms of PPA, the company has contracted to sell power at around ₹2.40 per unit, while in the open market it could sell at ₹3.50 a unit. The company would have a 40 per cent increase in return for the same cost. Adani Green produced power at a low cost and if they pulled out of supplying power through the grid, the consumers’ price would go up, he said. He also said neither SECI nor the AP government had said anything to Adani Green about the status of the project. “They have to approach SECI, but they have not, and SECI hasn’t said anything to us,” he added.