EAS Sarma Flags ‘Non-transparent’ Allotment of PSP Sites in Andhra Pradesh, Seeks Probe by Central Agencies

Moneylife Digital Team 07 April 2026

Economy & Nation

Raising serious concerns over the allocation of sites for pumped storage hydro-electric projects (PSPs) in Andhra Pradesh, former Union secretary EAS Sarma alleged that successive state governments have allotted valuable natural resource assets to private players through 'highly non-transparent' procedures.

Mr Sarma, in a letter to Cabinet secretary TV Somanathan, claimed that both the previous YSR Congress Party-led government and the current TDP–Jana Sena-led dispensation has deviated from prescribed norms by allocating project sites to companies such as the Adani group, Navayuga group and Chinta Green Energy group on a nomination basis instead of following competitive bidding processes.

Mr Sarma emphasised that pumped storage hydroelectric projects are critical for optimising energy systems, especially with increasing renewable capacity, but cautioned that their social and environmental costs must not outweigh the benefits.

He noted that while India currently has an operational PSP capacity of about 7,180MW (megawatts), projects exceeding 60,000MW are in the pipeline, many of them involving private developers.

Referring to guidelines issued by the Union ministry of power in April 2023, Mr Sarma pointed out that PSP projects involving private participation are required to be awarded through a transparent two-stage competitive bidding process. This includes pre-qualification based on financial and technical capability, followed by bidding on quantifiable parameters.

He alleged that Andhra Pradesh has bypassed these norms, unlike several other states, such as Maharashtra, Karnataka, Madhya Pradesh, Chhattisgarh, Odisha and Assam, which are reportedly adhering to the prescribed framework.

The former bureaucrat further flagged that several of the allocated project sites are located in scheduled areas, where legal safeguards under the Panchayats (Extension to Scheduled Areas) Act (PESA) and the Forest Rights Act (FRA) mandate prior consultation with local tribal gram sabhas.

According to Mr Sarma, these provisions have been 'blatantly bypassed', raising concerns about violations of tribal rights and environmental safeguards. He also cited the Supreme Court’s ruling in the Samata case which restricts the transfer of land and natural resources in scheduled areas to private entities.

Highlighting the environmental implications, Mr Sarma says that even stand-alone PSPs require substantial water drawal and replenishment which could adversely impact local water resources and communities dependent on nearby streams. He suggested that an objective assessment by the Central Water Commission would help quantify these impacts.

He also warned that such projects are capital-intensive and could lead to significant forest degradation, particularly in ecologically sensitive regions.

Drawing parallels with landmark cases such as the 2G spectrum case and the Coalgate case, Mr Sarma argued that non-transparent allocation of natural resources to private entities could attract liability under anti-corruption laws.

He stated that such practices create scope for malfeasance, including potential money laundering and economic offences, and called for a thorough investigation by central agencies.

Mr Sarma urged the Cabinet secretary to initiate a probe into the matter and take action against those responsible, stressing the need to safeguard public interest and ensure accountability in the allocation of natural resources.

There was no immediate response from the Andhra Pradesh government or the companies named in the communication.

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