Credit rating agencies have welcomed the Andhra Pradesh High Court’s decision upholding the sanctity of power purchase agreements (PPAs) with private renewable energy generators that the State government had sought to annul. The ruling would give a major boost for investor confidence, they said.
India’s top court has overturned a decision that allowed the State to pay power producers at almost half the rate agreed in their contracts, energy agencies have said. It could pave the way for improved liquidity for private solar and wind generators, they added. That would, however, hinge on the State paying up its dues for the past three years as the court had ordered, and not filing an appeal in the Supreme Court, they said.
Fitch Ratings expects the outstanding receivables to fall by 35% for ReNew Power Private Limited and 48% for Greenko Energy Holdings, if they pay their outstanding dues in line with the PPA’s within six weeks.
ICRA estimates an incremental impact on power purchase cost of about ₹10,500 crore, due to the dues that have piled up according to the original PPAs’ rates.
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