Pashupathy Gopalan, who heads the Asia-Pacific and Sub-Sahara African operations of the US renewable energy major, SunEdison, says he does not believe investing in Tamil Nadu’s power sector exposes a company to payment risk.
This is a contrarian view, for the generally-held (and often whispered) view is that the state’s electricity distribution company, Tangedco, does not pay power suppliers’ dues in time.
Payment of Tangedco’s dues to wind power companies, for instance, have often been delayed by as long as even one year, while six months has become more like the norm.
A solar industry player, (the head of another American company with operations in India, who did not wish to be named) pointed out that even with such a remunerative tariff as Rs 7.01 a kWhr, not too many solar companies have rushed to sign power purchase agreements with Tangedco, because the lenders are not happy to lend to projects in Tamil Nadu.
Pashupathy Gopalan, on the other hand, notes that while there could be delays in payment, “all you need to do is to factor that delay in your cost calculations.”
SunEdison has signed PPAs with Tangedco for putting up about 150 MW of solar power plants in the state. Other major companies that have signed up for large projects include the Adani group, Welspun and Sterling & Wilson.
“Assume there is a six-month delay in payment—if I am willing to bring in my own money to repay the lender in the first six months, then the lender should not have any problem,” says Gopalan.
Responding to a question, Gopalan said that the price offered for solar electricity in Tamil Nadu—Rs 7.01 a kWhr—is not high, if you take into account the lower sunshine and higher land costs in the state, compared with some other states such as Madhya Pradesh or Rajasthan.