Amidst growing concerns over flawed agreements with Independent Power Producers (IPPs), the Senate committee has called for comprehensive information on all capacity payments made to IPPs over the past two decades. The committee specifically requested details about the owners of these power plants in addition to the amounts paid out for capacity fees.
Capacity payments are part of the ongoing debate due to power plants receiving payments without generating any electricity, leading to financial strain. The dollar indexation of these capacity payments, which is a method of adjusting payments based on the exchange rate between the US dollar and the local currency, has been affected by the depreciation of the rupee against the dollar in the last year. This has led to increased costs for the power sector.
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An estimated Rs8.344 trillion in capacity payments has been made to IPPs over the last 10 years, a significant portion of the power sector’s budget. With a projected Rs2.1 trillion expected to be paid in the upcoming fiscal year 2024-25, the committee is concerned about the sustainability of these payments and their impact on the power sector’s financial health.
The committee’s letter to the secretary of the Power Division sought copies of the original agreements with IPPs from 1992, including details of the price per KW for each plant along with comparative analyses, as well as information on technical faults, sponsors, and power policies. The committee emphasized the transparency of the process, as providing this information well in advance of the next meeting will allow members ample time for preparation and ensure a fair assessment.
