Union Finance Minister Nirmala Sitharaman gave her piece of mind to the Jagan government. She advised the Andhra Pradesh government to honour legally binding international agreements and projects.
Sitharaman said if the international agreements are not honoured, it would cause significant impairment to the business environment and also cause a dent to the image if the country. She said foreign investors are now watching closely the situation unfolding in the state regarding the cancellation of international agreements. “I am not getting into local politics, but if the government cancels international agreements, we will face difficulties in getting projects,” she suggested while addressing the party’s virtual rally from New Delhi.
After the YSRCP rode to power in 2019 polls, Chief Minister Jagan Mohan Reddy cancelled and renegotiated several power purchase agreements (PPAs) signed by his predecessor N Chandrababu Naidu raising concerns among investors and prompted questions over the sanctity of signed contracts in India.
During Naidu’s regime, UAE based Lulu Group announced to invest more than Rs 2,000 crore to build an five-star hotel, an international convention centre and a shopping mall. The Naidu government had entered into an agreement with Lulu Group, but was later cancelled by the Jagan government following which Lulu Group said it will not invest in Andhra Pradesh and evinced interest in investing in Telangana. The Jagan government cancelled the land allotted to the Lulu Group.
The AP goverment also terminated Startup Area project in Amaravati given to a Singapore consortium, a project which was signed during Naidu’s regime.
As a matter of fact, Japanese ambassador to India Kenji Hiramatsu wrote to Jagan about concerns regarding the state’s renewable energy sector after his government decided to review the tariffs of sealed-and-signed renewable energy contracts. Japanese companies have substantial investments in at least two major renewable energy developers with stakes in the state.
Nirmala Sitharaman advised the Andhra Pradesh government to continue with the power purchase agreements (PPA). She said the government should be cautious in internationally funded projects.
Already, the World Bank had “dropped” its plan to extend a loan of $300 million (nearly Rs 2,065 crore) to Andhra Pradesh for the construction of Amaravati.
The Union Finance Minister also suggested that the AP government introduce energy reforms while expressing utter shock that the government has imposed electricity charges of Rs 9.75 per unit while the central government was extending electricity to Andhra Pradesh at Rs 2.75 per unit.