Creating political risk

Andhra Pradesh should maintain the sanctity of contracts

The Andhra Pradesh government, under Chief Minister Y S Jagan Mohan Reddy, wants to renegotiate various agreements decided under the previous Telugu Desam Party government. The government has set up a high-level negotiation committee to “review, negotiate and bring down” the power tariffs agreed upon with various renewable energy power projects in both the wind and solar sectors. The government claims that state distribution companies, or discoms, are in such poor financial health that it cannot honour its agreements. This will affect both private- and public- sector power producers. For now, the Andhra Pradesh High Court has stayed the government’s