Political Negotiation

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 30 November 2022




Case Study - RZ Renewable Energy and Andhra Pradesh Government

RZ Renewable energy owned by Zeeman Ravdjee, is a decade-old sustainable energy company that was launched aiming to address the gap of efficient supply of renewable energy in India. RZ Renewable builds, develops, and generates sustainable energy for commercial and industrial customers and also the grid. It shows keen interest in the national economic development by catering to India’s growing demand for renewable energy and sustainable projects and thereby, leading the renewable energy production in India. It is making use of its state-of-the-art product offerings and best in class service to tap into the unexplored opportunities of the country by promoting Renewable Energy projects for sustainability and efficiency.

RZ had executed and commissioned its Wind Power Project in Anantapur in 2016. Over the years, the company has grown exponentially and is looking to expand to other forays in the financial year 2023. Being the 3rd most attractive renewable energy market in the world, the Indian renewable energy sector is a potential push for the Indian economic situation. Thereby, the government is creating a friendly environment to attract and accommodate foreign investments. In Andhra Pradesh, the government has decided to facilitate potential land lease of around 5 lakh acres to renewable energy export project developers and attract investment, equipment manufacturing facilities and generate additional revenue as part of a policy framework to promote renewable energy.

In the month of September this year (2022), the YS Pavan Mohan Reddy-led Andhra Pradesh government announced its decision to reopen power purchase agreements (PPAs) that were signed between the energy generators like RZ Renewable Energy company and the state’s electricity distribution companies (discoms) under the previous government led by N. Shekhar Babu Naidu (present opposition leader). This has led to reduced tariffs paid by the state to the power generators and the contracted quantum of wind and solar power in the PPA’s not being procured. The state government claims that though they have asked the discoms to procure all such electricity generated, due to the low power demand resulting from the pandemic, grid safety issues have been raised. If there are grid safety reasons, the Electricity Act of 2003 gives the provision to curtail power offtake.

Like other power generating companies, RZ is also affected by these suddenly reduced tariffs that are risking the recall of its loan facilities and meeting obligations out of Renewable energy projects such as employee salaries, operation and maintenance costs, vendor payments etc. Discoms have informed the developers that if the revised tariffs (reduced tariffs) are not agreed upon, the PPA’s would be terminated. This has been taken to the Andhra Pradesh High court (HC) and the court has directed the discoms to pay the reduced interim tariff until the issue is resolved by the Andhra Pradesh State Electricity Regulatory Commission. In Andhra Pradesh, payment and curtailment issues are sub-judice and due to the pandemic, HC has not been able to hear IPP (independent power producer) cases. Alongside, the lobby group fighting against the tariffs allege that the state agencies have also resorted to excessive illegal curtailment of electricity that has resulted in huge generation and revenue losses.

The State government has been receiving strong criticisms from the union government, and global investors such as Goldman Sachs, Brookfield, SoftBank, Canada Pension plan Investment Board, Caisse de dépôt et placement du Québec, JERA Co. Inc., GIC Holdings Pte Ltd, Global Infrastructure Partners, CDC Group Plc, etc. Besides, this decision has also drawn criticism from the governments of France, Canada, and Japan due to the investments made by their firms in Andhra Pradesh’s clean energy space. The case is in the Andhra Pradesh high court and is seen as an interesting and pressing issue.

Questions:
  1. Is there a mutual interest between the government and RZ company? If yes, how?
  2. What could be the possible reasons for the YS Pavan Mohan Reddy-led Andhra Pradesh government to reopen the PPA agreements despite what it claims?
  3. Do you think RZ should employ a dominant approach or submissive approach while trying to convince the government to consider its decision? Is there any other possibility?
  4. Apart from RZ and the AP government, who else is affected by this reopening of the PPA decision?
  5. If you are part of the Andhra Pradesh State Electricity Regulatory Commission, what would be your recommendations in this case?



Value Conflict
The Story: Farmers, Politics and Caste

Seetha is a journalist working at a renowned media house in India. She has been working there for a few months now. She finds from a source that a farmers march is going to happen in the coming week from Nashik to Mumbai in order to bring the eyes and ears of the Maharashtra government to their dire conditions, determined to get answers to their demands on loan waivers, MSP (Minimum Support Price), and procurement of their produce among others. She is very passionate about the story and wants to cover it. But as she pitches it to her editor, she is asked not to cover the story. The reasons given by the editor as directed by the media house owner, is that they cannot send a team with her without exact details as the union budget session is ahead and is the top most priority. As Seetha digs for details, she gets a tip from an insider in the government that a committee to relook at the Swaminathan commission’s report on the farmers condition as appointed by the supreme court, is going to meet with the Chief minister of Maharashtra in the same week. Now, as she tries to look at the story, she realizes this march could be a significant move by the farmers and could be aimed at bringing national attention to their issues when the committee is in town and when the union budget is being released, thereby putting enough pressure on the government to be in the spotlight and be accountable.

Now, the problem is how would she convince her bosses. Being a freelancer before, and skilled enough to cover events without a team, she decides to keep working on the story and be prepared to cover the event by herself. It turns out that the media house she works for, is owned by a woman married into an american-based Indian business family hailing from Maharashtra and belonging to the Maratha caste. When Seetha visits Nashik to understand the pulse of the farmers on ground, she learns that the march is being led and dominated by the farmers from the Vanjari caste. Now, to put in perspective, the Maratha caste is a politically dominant caste in Maharashtra against the Vanjari caste which is one of the three major minority OBC’s (Other Backward Castes) in Maharashtra. The Marathas traditionally support the Congress party and lately the NCP (National Congress Party). Now, she understands the root of the resistance from her bosses. This also opens her up to other possible pieces of this conflict consistent with the current scenario like the electoral bonds and the political climate of Maharashtra with the BJP- Sena government in power. Clearly, she realizes her journalistic duty being compromised at the media house. As a journalist, she wants to cover the story in public interest despite the suppression from her organization. The caste-based political values of the media-house owner are affecting her journalistic ethics.

QUESTIONS:
  1. Do you agree that Seetha’s journalistic duty is compromised by the media house? Why or why not?
  2. What is the disadvantage Seetha has over the other journalists already working in the media house?
  3. Ethics are not rules. Why do you think there is a conflict of interest between Seetha and the media house?
  4. What could be the consequences of Seetha rebelling against the media house outright?
  5. If Seetha seeked your suggestion to deal with this conflict, what would you recommend?


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