Owners of four Independent Power Producers (IPPs) set up under both 1994 policy 2002 policy have been directed to voluntarily discontinue the Power Purchase Agreement (PPA) and go into ‘pay-and-take mode’, an official privy to the dealings told The News.
Official privy further said, “The government will not pay capacity payments anymore in the range of Rs139-150 billion per annum to the said IPPs for the next 3-5 years; this has been told to the proprietors of the said five IPPs. They have also been categorically told that the government has already made excess payments to the said IPPs in the form of capacity payments and returns on equity and has also paid the loans for the IPPs.”
Meanwhile, the owner of IPP, the official said, responded that if the government pays RS 55 billion to his company, he will not only be ready to terminate the contract but also hand over the plant to the government.
The main member of the task force has told IPP owners that there is no other option for them; if they don’t act, a forensic audit will initiate and recover extra profits they made in the past through wrongdoings.
The 1994 governmental agreement with IPPs states that whether these power producers work at a hundred per cent efficiency or fifty per cent efficiency, they will be paid for their installed capacity.
The agreement was based on a ‘take or pay’ policy (the government was bound to pay to IPPs even if no electricity was produced or supplied), not a “take and pay” policy.
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