“The Centre has taken a stern view of state distribution companies violating contracts by bullying solar and wind power developers to cut prices, which bankers say will discourage lenders and investors.”
“Fierce competition in solar and wind power auctions along with falling prices of equipment have helped tariffs tumble to record lows, making older projects look very costly. This has prompted many state discoms to ask project developers to sell electricity at the lowest available rate even if the contract for a particular plant was signed when costs were much higher.”
“The Indian Banks Association has also written to the power and finance ministries saying that the action by states was threatening the viability of projects, which in turn would make their loans risky.”
“States where project developers are being pressured to cut tariffs include Tamil Nadu, Andhra Pradesh, Karnataka, UP and Jharkhand.”
We know how Modi government looks at farmers distress caused by fall in prices of agricultural commodities. Minimum Support Price is the mechanism through which the state fulfils its social agreement with farmers. While the MSP is not raised commensurate with the rising costs of agricultural inputs and increasing commercialisation of farmers livelihood, public procurement is practically made defunct leaving farmers to the tender mercies of ‘market forces’.
But Modi government will not allow market forces to operate when it comes to ensuring profitability of capitalist investors. That is the logic behind the government cracking the whip on public sector distribution companies negotiating to lower prices of power purchase according to market trends.
Modi government is so concerned about the agreement favouring private investors (at the cost of general public) and insists that agreements should be honoured and state electricity boards should bear the losses. What about agreement of the government with farmers to procure farm produce at remunerative prices?
The Indian Banks write to the government to assure income for private companies. What do these banks do about farmers’ income being squeezed? They protest farm loan waiver saying that it will disrupt credit discipline among the population. Why not lobby with government to ensure 100% procurement of farm produce at high enough prices to enable farmers to payoff bank loans?