AP HC directs payment of INR 1450 crores

| Dec 2019 |
Andhra Pradesh High Court directs payment of INR 1450 crores to renewable power generators

Ensuring financial viability of power generators is critical to the growth of power sector in India. Upholding this theme, the AP High Court through its Chief Justice in a significant order has directed the state power distribution companies to make payments to renewable power generators and clear all admitted liabilities expeditiously.

Background facts: A single judge bench of AP High Court had previously quashed orders of the Govt. of AP seeking re-negotiation and unilateral reduction of renewable power tariff in already concluded power purchase agreements. While doing so, on the issue of pending payments since May 2018, the AP High Court directed the state discoms to approach the State Regulatory for seeking any revision in concluded tariff and meanwhile directed interim payments at INR 2.44/MW to solar gencos and INR 2.43/MW to wind gencos till the final disposal of matters by the State Regulator. Many renewable gencos including Tata, ACME and Mytrah challenged the said judgment including requirement of approaching State Regulator and suffering financial distress, also sought for all pending payments from the state discoms. Some of these developers also filed contempt proceedings against state discoms for not releasing payments as directed by AP High Court in its initial order.

Order: A bench of AP High Court headed by the Chief Justice today directed the state discoms to release the undisputed amount of INR 1450 Crores within 4 weeks to the renewable gencos at the interim rate directed previously by the High Court. All the prospective invoices too shall be paid at the interim rate till the final disposal of the appeals by AP High Court. The said amount of Rs. 1450 being the total outstanding in terms of Single Judge’s Order is disputed by renewable gencos and taking the same into consideration, the AP High Court has further directed the renewable gencos to submit their claims in a period of one week followed by joint meetings between the parties to identify the total outstanding in terms of the Single Judge’s Order.

Our view: This is a seminar order for it provides a semblance of comfort and certainty to investors in Andhra Pradesh, who have been reeling from regulatory uncertainty, PPA rollbacks, tariff reductions and a host of other constraints. The instructions of the AP High Court instructing state discoms to make payments in terms of Single Judges order further vindicates the stand of renewable genecos embroiled in a legal tussle contesting the decision of the state and its utilities resiling from their contractual promises and policy decisions. This order will indeed give a fillip to the existing renewable genecos enabling them to continue their operations and safeguard their huge investments in the state.

HSA Advocates Partners Hemant Sahai, Apoorva Misra and Shreshth Sharma along with Principal Associate Aditya Singh and Associate Samarth Kashyap represented Tata Power, ACME and Mytrah in this matter, which was led by Senior Advocates Mr. Sanjay Sen and Mr. Sajan Poovayya.