Japan warns against Andhra Pradesh's review of sealed energy deals

The state is looking to cut renewable energy tariffs by reviewing already sealed contracts.

Japan said that investors were spooked by Andhra Pradesh's recent move to review signed-and-sealed contracts in its larger effort to cut renewable energy tariffs, according to an Economic Times exclusive report.

In a missive obtained by the publication, Japanese ambassador to India Kenji Hiramatsu told chief minister YS Jaganmohan Reddy that foreign investors, including Japanese firms, are watching the "situation unfolding in the state."

“Our concern as Japanese government is that if legally binding contracts are not honoured, it would cause significant impairment to the business environment of AP state,” Satoshi Takagi, second secretary in the embassy of Japan, told ET.

Soon after taking over as CM, Reddy had claimed that the previous Telugu Desam Party government had signed wind and solar power purchase agreements (PPA) at tariffs higher than other states, and alleged there were malpractices involved.

He formed a committee to renegotiate all such PPAs, prompting project developers to move court. The Japanese ambassador advised the chief minister to reconsider the matter.